National Insurance (NI)

National Insurance is deducted from your earnings and funds various state benefits such as the NHS (National Health Service) and the State pension. National Insurance contributions are due on top of PAYE income tax.

National Insurance Rates 2009/2010

Visit http://www.hmrc.gov.uk/rates/nic.htm for further information.

If you work under the PAYE system, your employer automatically deducts Income Tax and employee’s National Insurance contributions from your gross pay. As well as these deductions, your employer incurs further costs to themselves (12.8% of your gross salary). This Employer’s National Insurance goes to the Inland Revenue.

If you decide to work through a limited company it is the responsibility of that company and yourself, as a Director of that Limited Company, to ensure any due Income Tax or National Insurance is paid. Limited Company directors should note that whilst dividends are completely NI free, they must pay both Employee National Insurance rates and Employer National Insurance rates on any salary that is paid, above the tax free personal allowance threshold of £6,475.

Applying for a NI number
To work in the UK, you need a National Insurance number by law and must apply for this as soon as you start working. You can apply prior to starting your job if you have a letter from Martin Ward Anderson showing you are actively looking for work. To apply:

• Find out where your nearest DSS office is located by calling +44 (0) 845 600 0643 between 8.00am and 6.00pm, Monday to Friday
• Make an appointment for a one-to-one interview
• Don’t forget to take:
• Your passport
• Proof of UK address – Use your UK bank statement if you do not have a utility bill in your name
• Letters of appointment contract or pay slip confirming employment or letter outlining that you are seeking employment. For the latter, if you are registered with Martin Ward Anderson, we can provide you with a letter of registration as proof that you are actively seeking work

Keep your N.I number safe and do not disclose it to anyone who does not need it. If you are employed, you should tell your employer your number as soon as you have it. If you are self-employed, you need your National Insurance number to apply to pay self-employed National Insurance contributions.

What is the National Insurance number card?
The National Insurance number card is issued when you first apply for a National Insurance number.  It does not provide proof of your identity. If you live abroad a card will not be sent to you. If you live in the UK but have a temporary or unsafe address you will be able to collect your card from your nearest DWP office, or Social Security office in Northern Ireland about 8 weeks after your application is made.

What do I do if I have lost my National Insurance number card?
Report it to your nearest DWP office, Social Security office in Northern Ireland or HM Revenue & Customs office. If you want a replacement card you will need to complete an application form.

Do I need to notify DWP if my circumstances change?
Yes. Please write to your nearest DWP office, Social Security office in Northern Ireland or HM Revenue & Customs office quoting your National Insurance number. Tell us what change has occurred and when it happened.

Property of Martin Ward Anderson 2009
Martin Ward Anderson accepts no liability for the accuracy of information contained in the document. For advice based on your own circumstances, talk to a professional adviser. Information in this document is based on tax law at the time of writing and will be subject to change. There is more detailed information about National Insurance numbers on the HM Revenue & Customs website www.hmrc.gov.uk