What is National Insurance and how does it work?

An increase in National Insurance contributions could be used to address the long-term costs of social care and provide the NHS with a post-pandemic boost.

The exact details of the funding package have yet to be determined, but reports suggest that workers and employers alike could see their NI contributions increase in an effort to bolster both the health service and social care provision.

Justice minister Robert Buckland has declined to comment on the reports, but told BBC Breakfast that there should be a “grown-up conversation” on how rising social care costs are covered.

So what is National Insurance, who pays it, and what is it for?

What is National Insurance?

National Insurance is a form of taxation on both earnings and self-employed profits. Employers, employees and the self-employed all pay it.

Once you reach the state pension age, you no longer pay NI contributions.

The proceeds raised from National Insurance contributions go towards paying some state benefits, including statutory sick pay, maternity leave, the state pension and additional unemployment benefits.

Also, people who are paid a low wage or serve as a carer may be entitled to National Insurance credits.

Justice secretary Robert Buckland has called for a "grown-up conversation" on social care costs
Justice secretary Robert Buckland has called for a “grown-up conversation” on social care costs

What is my National Insurance number?

UK nationals should receive a National Insurance number (and an accompanying card containing it) shortly before their 16th birthday.

However, you should also be able to find your NI number on your payslip, P60, or any letters you’ve received about tax, benefits and pensions.

If you still can’t find your NI number, you can contact the National Insurance numbers helpline for assistance.

If you're a UK national, you should have received your NI number and card before your 16th birthday
If you’re a UK national, you should have received your NI number and card before your 16th birthday

How do I pay my National Insurance contributions?

People who are in regular employment will have their National Insurance contributions automatically deducted from their wages.

The self-employed need to arrange their contributions themselves, which they typically do when filling out their self-assessment tax return every year.

Whatever your circumstances, you must ensure that you’ve been assigned the right tax code, otherwise you could find yourself paying too much.

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