​Everything you ever needed to know about National Insurance and more

Reading this article may not change your life for the better but it will certainly help you understand the purpose of National Insurance and why you need a National Insurance Number (NINO) to work in the UK!

By Sarah Milne

About National Insurance  

UK residents receive a National Insurance Number automatically when they turn 16. But for those newly arrived to the UK on a working holiday, it’s something for which you will need to apply.

A National Insurance Number is like a Tax File Number (for the Australians among us), or an Inland Revenue Department  (IRD number) for the New Zealanders. It is also similar to having a Canadian Social Insurance Number (SIN), while the German equivalent is an ‘Identifikationsnummer’, or tax identification number.

It’s worth keeping in mind that you will need to apply for a UK National Insurance Number, but you can start work while waiting for your application to be processed.  

What is National Insurance?

National Insurance, which is often abbreviated to NI (or NIC, National Insurance Contribution or NINO, National Insurance Number), is money that is paid to Her Majesty's Revenue and Customs (HMRC) by employers, employees, and those who are self-employed. So basically everyone who works in the UK!

Historically, it was a fund that was set up after the Second World War to prevent a return to the poverty levels that existed after the war. Everyone contributed to the fund, which was then used as an insurance scheme to provide benefits for those who could not support themselves.

It still remains a Government Scheme and anyone working in the UK (earning over a set threshold) must pay into the scheme.

 What is the National Insurance Number used for?

Your NI number will include two letters, six numbers and another letter, so AB 123456 C. It works as your tax number, so that the HMRC can track the amount you have contributed and therefore what you are entitled to. It also works as a reference/ID number for other departments such as the National Health Service, because it is unique to you.

Once you have received your letter from the HMRC detailing your NI number, you’ll then need to provide a copy to your employer or company’s human resources (HR) department. This will mean that you pay the correct amount of tax and NI whilst you are here.

How long is my National Insurance Number valid for?

Once you apply for and are allocated a National Insurance Number, it’s yours for life. If you leave the UK and return 25 years later, you will still have the same National Insurance Number.

The UK Deed Poll office says that if you change your name via Deed Poll, you cannot change your National Insurance Number.

However, you can and should contact HMRC and ask them to update your records in their system, especially in relation to your NI number.

If you lose your NI number or change your address, you should also notify HMRC. Just think, you may be eligible for a tax refund, but if your details are not up-to-date, your tax cheque will never reach you! 

You can complete the online form on the HRMC website, or call the National Insurance enquiries helpline on 0300 200 3500 (lines are open 8am to 5pm, Monday to Friday).

National Insurance Payments

How much will I pay?

If you earn more than £157 a week (this is the figure for the tax year 2017-2018) then you will have to pay NICs. How much you pay depends on how much you earn.

You will pay 12% of your weekly earnings between £157 and £866;

Then you pay 2% of any weekly earnings above £866.

As an employee, the money you earn (your salary or hourly wage) is called your gross pay. When deductions from your gross pay such as tax and National Insurance have been taken off, the amount left (and what is paid into your bank account) is called your net pay. You can see what your gross pay was and how much has been deducted on your payslip.

When do I pay National Insurance?

Your NIC, or National Insurance contribution is taken from your gross salary when you are paid. So whilst you are working you will be required to pay NI, unless you do not meet the tax threshold.

Your National Insurance contributions will be deducted along with Income Tax before your employer pays you.  On your payslip you will see the deduction for your NIC along with the deduction for Tax. If you are self-employed then you will need to set up a regular payment to the HMRC to cover this requirement.

Is National Insurance essentially another tax?

Good question, and yes it is, why on earth don’t they just call it a tax? Because that is essentially what it is!

What do National Insurance payments pay for?

Your National Insurance contributions will go towards various state benefits and services, including:

Will I have to pay National Insurance?

If you are aged 16 and over and working in the UK, then yes you must pay National Insurance… providing your earnings are more than the threshold. 

If you're employed, NICs will be taken automatically from your monthly pay. If you are registered as self-employed, you’ll have to arrange to pay your NIC yourself.

Will I be taxed more if I start work without a National Insurance Number?

This will depend on the HR department and how they set up your payroll. If the HMRC has insufficient information from your payroll manager then you might be put onto Emergency Tax. You can tell by your tax code whether you are on Emergency Tax -- you might be taxed at a higher rate which you can tell by the code. If you are, then you can get a rebate by contacting HMRC. 

Can I get a rebate on my National Insurance Contributions?

Many years ago you were able to redirect a percentage of your NI contributions into your pension or superannuation policy back home. It was only a small amount and the amount that equated to your pension contribution. 

From memory, it was only New Zealanders who could do this and it was through their accountant back home. But I believe this has all stopped. Please write and let me know if this any different. You are however, highly like to be able to claim a Tax Rebate at some point so it is worth reading up on this.

Applying for National Insurance

When can I apply for my National Insurance number?

You cannot apply for your National Insurance number until you have arrived in the UK. As a member of BritBound we will ask you to complete a document that tells us about your travel plans and then we’ll get your application underway based on your arrival dates. 

We will also talk you through the application process when you come along to the Arrival Info Party. So if you do nothing until that point, then all good, because that is what most people do, just leave it until they get to the BritBound Base.

How do I apply for a National Insurance Number?

Unfortunately, applying for your NI number is rather cumbersome. You firstly need to have a phone plan to allow you to call the HMRC, then you need to get through to them (!), so expect to be on hold for a significant time. 

At BritBound, we offer this service as part of your membership, not because you can’t do it yourself, but because it is a pain-in-the-you-know-what to do! We’re here to make your transition stress-free, which is why we will get this organised leaving you to enjoy exploring your new turf!

Is there a fast-track service?

No, even though websites claim to offer you a fast-track service it does not exist. These companies are just scamming you so do not be tricked! BritBound can help you by saving you the time trying to work out how to do it, but there is no such thing as an expedited service.

How long will my National Insurance number take?

This really depends on what process you follow. The application procedure differs depending on what nationality you are, what passport you enter on and whether you are here on a visa. At BritBound we will start the process as soon as you arrive (your travel plans allowing, of course).  As an average I would say it takes four weeks and up to six during the peak arrival period (April through to September).

Do I need to have a secure address to apply?

Yes, regardless of the passport you are travelling on you will need an address where your NI number application and NI number itself can be sent. The important thing to remember is that the address used for your NI application is going to become the default mailing address for any correspondence from the HMRC. This can include tax returns too! So don’t use a random address or a temporary one because you might easily miss out on a lovely, juicy tax return cheque! 

If you are a BritBound member then you can choose to use our address as your secure address for mail. A small admin fee applies but it will cover you for your first two months or longer. And we will always tell you when mail has arrived, even after your two months has expired, so you won't miss your tax refund cheque.

If I leave the UK and return later, will I need to apply again?

No, once you have a National Insurance number, you have it for life. So if you return home then come back to the UK in 10 years’ time, that number would still be valid. You would not need to apply again.

When do I get my National Insurance Number?

You cannot apply for a National Insurance number until you have arrived in the UK. As part of the application you will be required to provide evidence of your date of arrival. But you also need to call the HMRC number, which you cannot dial outside of the UK. 

If you are a BritBound member then we will start the process once we’ve confirmed your arrival date and made sure that you are going to be present in the UK long enough to complete the process. If you are travelling overseas shortly after arriving then we will usually wait until you return. But we will discuss all of this with you as part of your arrival process.

How can I change my address?

If you need to change your address then you need to call 0300 2000 532.

I have lost my NI number, how can I find out what my NI number is?

If you lose your NI number, you should notify HMRC. You can complete the online form on the HRMC website, or call the National Insurance enquiries helpline on 0300 200 3500 (lines are open 8am to 5pm, Monday to Friday).

https://www.britbound.com/jobs-for-britbounders/ref/hag-live-in-pub-bar-and-waiting-female-only

Employer related

Can I start work without a National Insurance Number?

Yes, absolutely. Most employers understand that organising a NI number for the first time is a process and will take a few weeks. Be aware though that not all employers are familiar with employing someone who has headed here from overseas to work. 

Larger HR departments will be more clued up but smaller employers might be less familiar with the on-boarding process. If you are met with any employer who tells you they cannot employ you without an NI number, this is incorrect and they need to be educated on the British tax system!

Is National Insurance a replacement for Travel Insurance?

No, because National Insurance is essentially just another form of tax. Whilst part of the contribution does go towards funding the NHS, it is really just an additional deduction from your gross earnings that goes to the UK Government. 

But it is worth remembering that whilst here that you are covered by the NHS* which means you do not pay to see a doctor or visit a hospital. So unless you specifically want (and can afford) private health insurance you don’t need to do anything to cover yourself medically. Of course I am not privy to your background and there may be reasons why you would need to take out additional healthcare cover.

*assuming that you are here on either an EU passport or have a visa that allows you to work or study here for a period of more than six months.

"Most employers understand that organising a NI number for the first time is a process and will take a few weeks. Be aware though that not all employers are familiar with employing someone who has headed here from overseas to work.

I have paid an Immigration Health Surcharge (IHS) fee – do I still have to pay National Insurance?

This really is one of those ‘not fair’ situations and I really think the UK Government has been quite cheeky to introduce the IHS fee.  It is certainly not something I really agree with. But the answer is yes, the National Insurance deduction, whilst in part contributing to the NHS, is not just about the NHS and therefore you have no option to pay it. Everyone who earns over the threshold has to pay it which means you will too!

Do I still need to get travel insurance?

Yes, because National Insurance is not insurance in the same sense as travel insurance is. Why? Well read through this document in full to see why!

Should I buy health insurance?

Only you can answer that. But you will not have to pay to see a doctor or go to the hospital under the National Health Service (NHS). But if you have medical reasons that require additional personal health insurance then of course. Do your research. For the average Joe, you will be fine with the NHS as this is the equivalent to your Medicare, or whatever it is called in your country.

Can my employer pay me without a National Insurance Number?

Yes, your employer can pay you without a National Insurance Number -- but it will be at a higher rate of tax. It is your responsibility to apply for an NI number. Your workplace will need to process your code using an emergency tax code until you have been issued with an NI number from from HMRC.

How can I reassure employers that they can employ me without a National Insurance number?

The answer would probably be to refer them to the HMRC employers line which will reassure them that you can start work without an NI Number. When you start working in the UK for the first time your employer will ask you to complete a Starter Checklist.

There is a field which asks whether or not you have an NI number, so here they should see that it is possible to register your details with the HMRC and be able to say you do not have a number.

If you do not have an NI number your tax code will probably be an emergency tax code. This means you won't initially have the benefit of the tax free threshold but once you provide your employer with your NI then any overpaid tax will be refunded to you in your next pay cheque.

If your employer uses Sage then this system does require an NI number but here is the advice from the Sage Payroll site to tell them how to get around this.

Most employers understand that organising a NI number for the first time is a process and will take a few weeks. Be aware though that not all employers are familiar with employing someone who has headed here from overseas to work. 

Larger HR departments will be more clued up but smaller employers might be less familiar with the on-boarding process. If you are met with any employer who tells you they cannot employ you without an NI number, this is incorrect and they need to be educated on the British tax system! The beauty about BritBound is that if you run into trouble, there is always someone on hand who can help you.

How long can I work without an NI number?

You could work your entire time here in the UK without an NI number because it is not a legal requirement. Paying NI however is. Unless you are self-employed, you are going to find that the majority of employers here will ask you to provide a National Insurance number as soon as possible. This is often because many payroll systems have been built making the NI field mandatory. So they will need it to pay you.

Is it illegal to work without an NI number?

The NI number is not technically an HMRC requirement so therefore it is not illegal. But paying NI is compulsory and so it is worthwhile and easier to apply for an NI number. Having an NI number will ensure you are on the correct tax code, pay the right tax and are able to apply for a tax refund at the year end, should you be owed one.