Tax Rebates & Refunds

Find out more about National Insurance contributions

August 25, 2011
Posted in Other Tax — Written by Jennifer

National Insurance (NI) is paid by all employed or self-employed people, provided that they are over 16 years of age and they earn more than a certain amount in a year.

National Insurance numbers

Your National Insurance number is like your own personal account number, to which all NI contributions and tax payments you make are recorded. It is also a reference number for the whole social security system, and it never changes.

Class 1, Class 2 and Class 4 NI contributions

Class 1 – this is paid by employed people and there are two rates. If you earn £139 – £817 a week, you pay 12 per cent of your earnings, whilst if you earn more than £817, you may 2 per cent of your earnings over this amount.

Class 2 and Class 4 – this is paid by self-employed people. This is both a flat weekly rate and a percentage of profits.

Voluntary National Insurance

Some people also choose to pay voluntary NI contributions. This may be because they aren’t working or claiming state benefits, or they have not paid enough NI in a particular year to get their State Pension. Other people pay voluntary NI because they live abroad and want to maintain their state benefits entitlement.

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