The National Insurance number is a number used in the administration of the National Insurance or social security system. It is also used for a few purposes in the UK tax system. The number is described by the UK government as a “personal account number”.
Payments made by employees and employers into the UK’s National Insurance (NI). National insurance contributions initially funded programs for the ill and unemployed, and later on eventually paid for state pensions too. Contributions fall into categories which can either count toward an individual’s eligibility for benefits or are paid without counting towards any type of entitlement depending on the category it falls under.
This relates to liability for Class 2 NIC. If your self employed earnings for the 2015/16 tax year are less than £5,965 then you do not need to pay Class 2 National Insurance Contributions.
National insurance contributions are made through payroll and income taxes. Over the years, contributions expanded to cover other government-provided benefits. Limits on contributions were removed from upper income levels, making this a more redistributive program.
If you would like any more information about National Insurance or have fallen behind in paying your NIC, please call us today on 08000 886 129