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Money, tax and benefits

Money, tax and benefits

National Insurance

You pay National Insurance contributions to build up your entitlement to certain social security benefits, including the State Pension. The type and level of National Insurance contributions you pay depends on how much you earn and whether you're employed or self employed. You stop paying National Insurance contributions in the year you reach State Pension age.

Who pays National Insurance?

You pay National Insurance contributions if you are an employee or self-employed and you are aged 16 and over, providing your earnings are more than a certain level. You stop paying National Insurance contributions at State Retirement age. This is currently 65 for men and 60 for women but will gradually increase to 65 for women over the period 2010 to 2020.

Your National Insurance number

Your National Insurance number is your own personal account number. The number ensures that the National Insurance contributions and the tax you pay are properly recorded on your account. It also acts as a reference number for the whole social security system.

Who uses your National Insurance number?

You must give your National Insurance number to:

  • HM Revenue & Customs (HMRC)
  • your employer
  • Department for work and Pensions (DWP), if you claim benefits 
  • your local council, if you claim Housing Benefit
  • the Student Loan Company if you apply for a student loan

You will also be required to provide your National Insurance number if you open and Individual Savings Account (ISA).

Entitlement to many benefits depends on your National Insurance contribution record (see 'Benefits that depend on National Insurance contributions' below) so it's very important that you keep your number safe and do not reveal it to anyone who does not need it. This will prevent identity fraud.

How to get a National Insurance number

If you don't already have a National Insurance number you must apply for one:

  • as soon as you start work
  • as soon as you or your partner claims benefit

To be able to apply you must be:

  • over 16 years of age
  • resident in the United Kingdom

If you are a parent or guardian and receiving Child Benefit, any children you care for will automatically get a card showing their National Insurance number just before they reach the age of 16.

To apply for a National Insurance number you will need to telephone the Jobcentre plus National Insurance allocation service helpline on 0845 600 0643. They will make sure you need a number and arrange for you to undertake an evidence of identity interview.

Evidence of identity interview

The interview will usually be one-to-one (unless, for example, you need an interpreter). The interviewer will ask you questions about your background and circumstances.

The interviewer may also ask you to fill in an application form.

If you don’t have any official documents

If you haven't got any official documents you still have to go to the interview. You might be able to prove your identity with the information you give at the interview.

National Insurance rates

The following amounts apply for the 2009-10 tax year:

If you're employed

  • if you earn above £110 a week (the 'earnings threshold') and up to £844 per week you pay 11 per cent of this amount as 'Class 1' National Insurance contributions
  • you also pay one per cent of earnings above £844 a week as Class 1 National Insurance contributions
  • you will pay a lower amount as an employee if you are a member of your employer's contracted out pension scheme

If you're self-employed

  • you pay 'Class 2' National Insurance contributions at a flat rate weekly amount of £2.40
  • you also pay 'Class 4' National Insurance contributions as a percentage of your taxable profits - you pay eight per cent on annual taxable profits between £5,715 and £43,875 and one per cent on any taxable profit over that amount
  • if your earnings in the 2009-10 tax year are expected to be less than £5,075 then you may be entitled to the Small Earnings Exception, meaning you don't have to pay any Class 2 National Insurance contributions - you can apply for Small Earnings Exception certificate for the 2009-10 tax year on form CF10

Benefits that depend on National Insurance contributions

Your entitlement to the following benefits and/or the amount you can get will depend on your (or in some cases your spouse or civil partner's) National Insurance contributions:

  • contribution-based Jobseeker's Allowance (Class 1 National Insurance contributions only)
  • Incapacity Benefit (if you can't work for long periods due to illness or injury)
  • contribution-based Employment and Support Allowance (ESA)
  • State Pension
  • additional State Pension (Class 1 National Insurance contributions only)
  • Widowed Parents' Allowance
  • Bereavement Allowance
  • Bereavement Payment

More useful links

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