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► National insurance
National Insurance Contributions (NICs)
Under UK law there are certain deductions employers have to make from employees' wages. These include tax and national insurance. All UK nationals are automatically allocated a National Insurance (NI) number at 16 (as long as Child Benefit has been in payment). If you are a non-UK student see our pages for EU and International students for information on how to get an NI number.
What do I pay NICs for?
NICs are important because they entitle you to certain contributory benefits and count towards your pension. If you have not built up a full contributions record, you may find you do not qualify for a full Basic State pension when you retire. In some circumstances, if you are not working, for example, you are sick or unemployed and signing on, or you are caring for someone, you will be 'credited' with contributions.
Some employers deliberately pay less than the National Insurance thresholds (see below) to avoid paying the employers' contribution. If you are earning just below the lower earnings limit it may be worth trying to negotiate an increase in salary so you can build up your NI contributions record. If this is not possible, and you want to keep your pension and contributory benefits rights, and you can afford it, you can pay 'voluntary contributions', (known as Class 3 contributions).
How much will I pay?
NIC rates change each April in line with the new tax year. Rates on this web page are current from 06 April 2010. If you are employed (ie. not self-employed), how much you pay depends on how much you earn, and whether you are "contracted in" or "contracted out" for pension purposes. There are 6 different classes of NICs although, for student purposes, this web page focuses on Class I NICs (if you are self-employed you are likely to be paying Class 2 contributions).
|
NIC level |
Weekly |
|
Lower earnings limit |
£97 |
|
Primary threshold |
Earnings between £97 and £110 |
|
Secondary Threshold |
Earnings between £110 and £770 |
|
Upper earnings limit |
£844 |
Neither you nor your boss will pay NIC contributions until your earnings reach the primary threshold. If you earn more than the lower earnings limit but less than the primary threshold whilst you won’t actually have to pay any national insurance on these earnings, you will accrue Class 1 contributions for your national insurance contribution record.
If your weekly earnings are more than the primary threshold contracted in pension holders pay 11% on earnings within the secondary threshold and contracted out pension holders pay 9.4% within the same threshold.
NB: If you have more than one job, you will pay NICs on both jobs (unless both jobs pay less than the lower earnings limit; ie. £97 per week, in which case you will not pay any NICs).
My employer isn't deducting my NICs from my pay
If you get paid "cash in hand", it's likely that your employer is not paying NICs. This may seem like a good idea because you receive more in your pay packet, but it is illegal and affects your other rights. Apart from potentially losing your future rights to certain benefits, you may not be eligible for other employment rights as your contract may be deemed illegal. If the Inland Revenue discovers that "cash in hand" payments have been made unlawfully, they can prosecute both you and your employer. You may have to pay back any contributions that have not been made. If you suspect, or find out, that NICs are not being deducted, we would strongly recommend that you raise this with your employer in writing. Please also see our web page on working cash in hand.
Why do I need a National Insurance Number?
HM Revenue and Customs and the Department for Work and Pensions (DWP) use a person's national insurance number (NINO) to identify their contribution and benefit record. A NINO number always consists of two letters, six numbers and a letter, for example, AB 123456 C.
How do I get a National Insurance number?
If your parent or guardian received child benefit for you when you were a child you will have automatically been registered for a NINO and sent a plastic card containing your number before your 16th birthday. If you were not registered for a NINO you will need to apply for one once you start working (this includes non-British nationals with rights to work in the UK). Anyone working and paid by a UK employer must pay National Insurance contributions.
There is no requirement to have a NINO before you start working and the DWP (Department for Work and Pensions) will not accept applications until the claimant has a job. Once you have a job, telephone your local DWP office (number below) to ask for an appointment, to which you will need to take:-
- a letter from your employer confirming that you are working (or your contract of employment or payslip); and
- your passport; and student card; and
- a letter from the University confirming that you are currently registered and studying there, dated after the start of the current term; and
- proof of your UK address but NOT a bank statement.
- It may also be useful to take any documents from the Home Office you may have but it is best to check with your local DWP when you call to make your appointment
Important note: Whilst you are waiting for the DWP to issue you a permanent NINO your employer can issue you a temporary number.
I've lost my national insurance number
If you’ve lost your NINO because, for example, you’ve not worked for some time, check through any papers you have from any previous jobs you have done (ie. pay-slips, P60). If you really can't find it contact the National Insurance Contributions Office (see below) who hold a record of your number. They will only give out information on a NINO if you are the applicant and then only where applications are made in person or the number can be sent to your home address. If you have lost your NINO card, only one replacement is allowed.
Useful contacts
Brighton DWP is
Hove DWP is
The National Insurance Contributions Office can answer any questions related to NINOs and can be contacted Monday to Friday 8am to 5pm on
