PLEASE NOTE: The charity TaxAid advises only those people on low incomes whose problems cannot be resolved with HMRC.

National Insurance contributions

Employee tax codes and National Insurance

If you are aged 16 to state pension age, you are liable to pay National Insurance. Your employer will deduct National Insurance contributions (NIC) from your pay, as well as income tax. National Insurance is not due on all your earnings. You are allowed to earn some money without paying National Insurance as an employee. National Insurance contributions entitle you to certain benefits (like a non-means tested level of Jobseeker’s allowance). They also count towards the state retirement pension. From 6 April 2011, the state pension age is rising, so it is important to know your expected retirement date and check that you are not charged National Insurance beyond this date  – if you are, you can ask for a refund (see National Insurance section).

If your earnings are between £112 and £155 (in 2016-17 and 2015-16), you are treated as if you had made National Insurance contributions, but you don’t actually have to pay National Insurance. At higher levels of earnings, (above £155 but less than £827 (£815 2015-16), you pay National insurance at a fixed percentage on your earnings (12%). For earnings above this level, you pay a small National Insurance charge (2%) on the additional earnings.

More than one employment

If you have more than one employment, NIC is calculated separately for each job. It is therefore possible to have total earnings above the NIC threshold of £155 per week, but because you receive less than this amount for each job, no NIC will be due.

If you earn above the Lower Earnings limit in any one job (£112 per week for 2015/16), and below the NIC threshold of £155 per week, you are credited with NI contributions, even though you do not have to actually pay NI.  These credits count for your contributions record (for state pension, and other contributions based benefits).

If you earn less than the Lower Earnings limit in each job (£112 in 2016-17 and 2015/16), you will not have get any NI contribution credits. If this is the case you may want to consider making voluntary NIC payments to retain your right to contribution based state benefits and the state pension.

If your total pay from two or more jobs is above the top threshold of £827 (2016-17) per week, you may pay too much NIC at the 12% rate.  If this is the case you can ask for a refund of overpaid NIC by writing to HMRC at the end of the tax year enclosing copies of your forms P60s; or you can ask HMRC to defer payment of some of the National Insurance using form CA72A: see form CA72A download page on the Gov.uk website.

Married women’s reduced rate election

Some married women and widows made an election (before May 1977) to pay a reduced rate of National Insurance of 5.85%. If you made this election it is important to check that it is still appropriate. See the National Insurance section reduced rate election for more details.

TaxAid Tip

For a full explanation of how National Insurance works, see our section National Insurance