What are National Insurance contributions?
National Insurance contributions (NIC) help to pay for some state benefits. In this section, we provide a summary of NIC and the different types and explain how they apply to you.
For more information on NIC go to ‘what is National Insurance?’ in the ‘tax basics’ section of this website.
What are National Insurance contributions?
National Insurance (NIC) is similar to a tax but it helps to pay for some state benefits at times when individuals need help, for example, when unemployed, or ill, in retirement or on death.
In the UK, you start paying NIC from the age of 16 once your earned income reaches a certain level and you are either employed or self-employed in the UK.
There are six different 'classes' (or types) of NIC. The type of NIC you pay depends on your circumstances – whether you are employed self-employed or are paying NIC voluntarily to make up gaps in your NIC record. You can find out more about the different types of NIC and the rates they are payable at, in our 'tax basics section'.
NI contibutions are not deductible when determining taxable income for either the employed or self-employed.
Neither do you get National Insurance relief on employment expenses for example, as you do for tax.
Please note that under PAYE, your National Insurance deductions are unlikely to be wrong. National Insurance is not compared to an overall annual amount, like tax.
Will I have to pay them if I am working in the UK?
Most people who work in the UK are liable to NIC as soon as they start work. For more see ‘What happens if I am hired in the UK?’
Some international assignees who are sent to the UK to work by their employers can remain subject to their home country social security legislation rather than pay UK contributions. Similar rules apply if you are self-employed and come to work temporarily in the UK.
We explain these exemptions further in our section ‘what if I am a posted worker from the EU, Norway, Iceland, Liechtenstein or Switzerland?’
How do I check my National Insurance record?
HM Revenue & Customs (HMRC) keep a record of the NIC individuals pay. It is possible for an individual to check their NIC record.
If you are living in the UK go to the 'tax basics section' for details.
If you are living abroad, you can send an online enquiry or write to the National Insurance International Caseworker at the National Insurance Contributions Office. Find out how from the GOV.UK website.
What are National Insurance credits?
You can find out about National Insurance credits in the 'tax basics section' of this website.
If you are not working or receiving NIC credits, you can choose to pay voluntary NI contributions in certain circumstances.
For example, Class 3 contributions can be paid on a voluntary basis if an individual leaves the UK, so that they can continue to build a UK state pension.
To be able to pay Class 3 NIC on a voluntary basis when you leave the UK, you need to satisfy either of the following conditions:
- you have lived in the UK for a continuous three-year period at any time before the period for which NIC is to be paid. (If you have lived or worked in another EEA country or in Turkey, time spent there might help you to meet this condition); or
- before you went abroad, you paid a set amount in NIC for three years or more.
A little known rule, says that Class 2 NIC can be paid on a voluntary basis if an individual leaves the UK. However this only applies where you will be self-employed or employed abroad. Class 2 contributions are cheaper than Class 3 contributions and actually protect more benefits than Class 3, so if you want to pay NIC on a voluntary basis, and will be employed or self-employed in some form whilst overseas, it may be better to pay Class 2 NIC.
You can find more on paying UK NIC and qualifying for contributions whilst you are abroad in HMRC booklet NI38, which is available on the GOV.UK website.
How does National Insurance work if I have more than one job?
If you would like information on how NIC works if you have more than one job, you can see LITRG’s factsheet: More than one job?
Is it possible to get a refund of NIC or transfer NIC to another country?
Migrants who work in the UK are liable to, and pay, NIC. It is not usually possible to obtain a refund of any of the NIC paid.
The NIC might be taken into account, however, when determining eligibility to state benefits in another country. This is likely to be the case if you are returning to a country within the EEA or to a country that has a social security agreement with the UK.