What National Insurance do I pay?
As an employee of the armed forces you pay your National Insurance contributions (NIC) through the Pay As You Earn (PAYE) system. Your NICs help to pay for some state benefits including state retirement pensions. We explain some of the issues you might face as an employee of the armed forces below.
If you want information on how to get a National Insurance number (NINO) or what to do if you have lost or forgotten your NINO, visit our National Insurance number page.
Which type of NICs do I pay?
Like all employees, service personnel pay Class 1 NIC on their salary.
How are my Class 1 NICs calculated?
Class 1 NIC is based on the gross salary you earn in each pay period. Service personnel are paid monthly so your pay period is one month. Each month is looked at separately (this is unlike income tax which is calculated on an annual and cumulative basis for everyone). You can earn a certain amount each pay period before you have to pay NIC. The amount that you can earn before you start to pay NIC changes each year.
Most service personnel are members of one of the armed forces pension schemes. Up until 5 April 2016 this meant that you were paying reduced Class 1 NIC, normally 1.4% less than many other employees. This is because these pension schemes were “contracted out” of the state second pension. Contracting out was abolished with effect from 6 April 2016 and since that date all employees pay the same rates of Class 1 NICs. This means your NICs increased from 6 April 2016.
You can find out the current rates and thresholds of NIC at ’Tax and NIC rates’. You can also read our separate section on ’Undestanding your payslip’ to find out more about what appears on your payslip and how your Class 1 NIC is calculated.
There is more information on how to work out how much Class 1 NIC you pay in the 'employed section'.
What happens if I have another job?
There is more information on what happens if you have more than one employment, or if you are both employed and self-employed in the ‘employed section’.
Can I pay too much or too little NIC?
Each year there is a maximum amount of NICs that any individual has to pay (across all the Classes).
If you think you have paid too much NIC in total, look at the ’tax basics section’ for more information.
What happens if I am working abroad?
You will continue to pay Class 1 NIC as normal on your service pay.
If you have another job or are self-employed whilst working abroad then you may have to pay the equivalent of NIC in respect of that work in the country in which you are living. There is more information on the webpage ‘residence and domicile for armed forces’.