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National Insurance in the UK

An introduction on how the social security in the UK works and the requirements to access.

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The National Insurance in the UK is what is also know as Social Security. Workers above 16 who are resident in the UK must contribute to their national insurance to be eligible for all the benefits in UK.

However, workers resident in an EU Country temporarily posted to UK might not have the same obligations as citizens resident there.

National Insurance in the UK

Social Security in UK is regulated and overall responsibility of the Department for Work and Pension, which took over the Department of Social Security from the 2001. This department has the highest spending amongst all the departments, and its responsibilities cover, but are not limited to, delivering State Pension and a wide range of working-age, disability, and ill-health benefits to all those having right to.

In addition to the above-mentioned department, Her Majesty’s Revenue and Customs (HMRC) administers tax credit and Child Benefit. As a matter of fact, Social Security is called National Insurance Scheme in UK, and every citizen having right to their own National Insurance Number (NIN).

Employees working in the United Kingdom who have their own NIN might be paying different type (which are called classes) contributions based on their employment conditions. As a basic principle, all the citizens above 16 should pay National Insurance Contributions if they:

  • Are an employee earning more than £242 a week; or
  • Are self-employed and making more than £6,725.

National Insurance Classes and Categories in the UK

National Insurance in the UK is divided in Classes, depending on the employment status and earning. Employees pay taxes based on the Class/es they belong to, which are:

  • Class 1: all the employees earning more than £242 a week and under State Pension age,
  • Class 1A or 1B: employers pay these on the employees’ expenses and benefits
  • Class 2: self-employed workers earning more than £6.725 a year
  • Class 3: this class is paid in case there are Contribution Gaps in the worker’s NIN (which might be due to low earnings, previous unemployment, and for those who lived or worked outside UK)
  • Class 4: self-employed workers earning more than £11.909 a year.

To assess how much employees or employers need to contribute, they use the National Insurance Categories, which are the following letters: A, B, C, F, H, I, J, L, M, S, V, Z. Most workers belong to Category letter A.

Thresholds and tax rates for both employees and employers are calculated and published by the HM Revenue and Customs (HMRC) every year.

How to apply for a NIN in the UK

To be eligible to apply for a NIN in the UK, the applicant must:

  • Live in the UK,
  • Have the right to work in the UK,
  • Have an offer to work in the UK.

However, if applicants fall under the EU Settlement Scheme, they do not need to apply for it.

To start the online application, the applicant must have either one of these documents:

  • A passport,
  • A biometric residence permit,
  • An EU Country, Norway, Liechtenstein or Switzerland national identity card.

If applicant possess one of the aforementioned documents, they can start the online application and upload a copy of the document and a selfie of the applicant holding the same document.

Should applicants not be able to forward the online application, they can send the application by post. Nevertheless, the processing times will be larger.

Once the application is completed, the competent authorities will review it (the procedure might take up to 4 weeks), and if the identity is proved, the National Insurance Number will be issued.

Foreign Workers in the UK

Workers coming to the UK from an EU Country will usually pay for only one social contribution scheme, thanks to the social agreements with those Countries.

To prove that the social security that needs to be paid is the one where the employee usually works, the employer or self-employed worker must apply for the A1 Model to their own National Social Security Institute (EU Regulation 883/04).

Said certificate can be requested for employees working temporarily in the UK for up to 2 years.

Although the legal basis of the Eu Regulation is not valid anymore in the UK, it still holds its validity thanks to the PSSC (Protocol on Social Security Regulation), which entered into force with the conclusion of the EU-UK TCA.

On the contrary, workers coming from Iceland, Liechtenstein or Norway should make sure to be covered by the EEA-EFTA Separation Agreement to make sure they only need to pay social contribution in 1 Country.

Should the worker not be covered by any social security agreement, National Insurance must be paid.

However, the worker can avoid paying National Insurance for the first 52 week of working in UK if the following requirements are met:

  • The worker usually works abroad and is employed by a non-UK employer,
  • The worker is only temporarily employed in the UK,
  • The worker is mainly employed abroad,
  • The worker is evaluated by the HMRC as not ordinarily resident or employed in the UK.

Regulatory Framework

EU Regulation 883/04

Reference

National Insurance Overview

Reference

National Insurance Classes

Reference

Social Security arrangements between the Eu and the UK

Reference 

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