Did you realize that you might overpay your National Insurance? The good news is that you can get a National Insurance Refund if you overpaid.
This NIC’s guide explains some of the fundamentals of National Insurance, such as who is required to pay and who is not, when you may be due an NI refund, and how to file an NI refund application.
It’s difficult enough to figure out which class of NICs you should be paying, and getting an NI refund is even more difficult.
Our national insurance guide includes information on each type of national insurance as well as the national insurance department’s contact information in case you need it.
Can I get back my national insurance money?
If you are employed or self-employed and are 16 or older but not yet eligible for the state pension, you must pay NIC. The amount of NIC you pay is determined by your income.
The sort of NIC you pay is determined by how you work. Employees and other workers (such as those engaged by agencies) pay different sorts of NIC to self-employed people (that is, those who work for themselves).
Even if you continue to work, you stop paying NIC when you reach state pension age. The self-employed must pay Class 4 NIC until the start of the tax year following the year in which they attain state pension age.
You pay National Insurance on earnings, such as wages and profits from self-employment, but not on pension income.
You may use the GOV.UK calculator to figure out when you’ll be eligible for a state pension.
I am a student. Do I have to pay National Insurance contributions?
Students, especially overseas students, are not subject to any particular rules. You will be required to pay National Insurance contributions in the same way as other UK workers. If you need a National Insurance number or have lost yours, see our page How do I get a National Insurance number? for help. A National Insurance number may be included on the reverse of a biometric residency permit for migrants or international students.
What are National Insurance credits?
Even if you are not working, you may be eligible for National Insurance credits in certain circumstances. Some, but not all, entitlements are affected by these. The state pension is the primary benefit they are eligible for.
For the year in which you may be credited, you must be 16 or older and under the age of state pension.
You may be eligible for National Insurance credits in a variety of situations, including being unable to work due to illness or caring for someone else.
National Insurance credits are divided into two categories: Class 1 credits and Class 3 credits. The type of credit you may be eligible for is determined by your specific circumstances. To get National Insurance credits, you must meet specific requirements.
National Insurance credits should be given automatically in some cases, such as if you receive employment and support allowance or carer’s allowance. In other cases, you’ll have to file a claim.
GOV.UK has more information on the many situations in which you can be eligible for National Insurance credits, as well as how to apply for National Insurance credits.
Adult Specified Credits (also known as babysitting or grandparent’s credits) are discussed on a separate page.
What benefits do my contributions pay for?
To be eligible for various UK government benefits, you must have paid a particular amount of National Insurance Contributions (NIC). Contributory benefits are a type of governmental benefit. National Insurance credits will apply toward these contributory benefits in some situations, but not in others. On GOV.UK, you should carefully review the eligibility requirements. Many benefits rely on the payment (or credit) of enough NIC to generate a qualifying year.
Other benefits are available regardless of whether or not you have paid any or enough NIC, as long as the requirements for claiming apply to you.
To figure out which type of donation goes toward which benefit, look at the table below:
There are several exceptions to the aforementioned, such as share fishermen and volunteer development workers who work in other countries.
Contributions to Class 4 National Insurance do not count toward any state benefits.
What are Class 1 National Insurance contributions?
If you work for an employer, or if you are an employee, you must pay Class 1 NIC. Before paying you, your company deducts the NIC from your wages. Your company is also required to pay NIC on your earnings, but you do not have to be concerned about this.
In the employment section, there is full information about Class 1 NIC, including instances.
What are Class 2 National Insurance contributions?
If you are self-employed, you must pay Class 2 NIC. Our self-employment section has more information.
The Self Assessment system is how HMRC collects Class 2 NIC. This means you are exempt from paying contributions during the tax year. Your liability will become due at the end of the tax year, and you will be able to pay it with your Self Assessment tax bill.
If you are self-employed and subject to Class 2 NIC, you must ensure that you are both registered for Self Assessment and registered for Class 2 NIC on HMRC’s systems. If you fill out form CWF1 when you start your own business, this should happen immediately.
HMRC may automatically reject your Class 2 NIC if you submit self-employed profits on a Self Assessment tax return without completing a form CWF1 since they have no record of your liability. In this situation, you should call HMRC at 0300 200 3500 to request a correction.
In some conditions, persons who are working (or self-employed) overseas can additionally pay Class 2 NIC. Please read our migration section for further details.
What is the Small Profits Threshold?
If you’re self-employed and your profits fall below a certain threshold (the Small Profits Threshold), you won’t have to pay Class 2 NIC. The limit for 2021/22 is £6,515.
What are Class 3 National Insurance contributions?
You can pay Class 3 NIC if you do not pay either Class 1 or Class 2 NIC and do not obtain National Insurance credits, but you want to maintain your rights to particular state benefits. Donations that are made voluntarily are also known as voluntary contributions.
Class 3 NIC can be paid by monthly Direct Debit or quarterly payment request for the current year. You can make a one-time payment for previous years’ contributions.
What are Class 4 National Insurance contributions?
If you are self-employed, you must pay Class 4 NIC. Class 4 NICs are paid in addition to Class 2 NICs, but they do not count toward any state benefits.
Only if your profits exceed a particular threshold, known as the Lower Profits Limit, are you required to pay Class 4 NIC. For 2021/22, this is £9,568.
You must pay Class 4 NIC in addition to any self-assessment income tax.
How do I pay National Insurance contributions?
Under the PAYE system, you pay Class 1 NIC on your wages. Your employer deducts Class 1 NIC and any income tax owed from your gross wages before deductions, and gives you the net amount after deductions.
Self Assessment allows you to pay Class 2 NIC along with the income tax payable on your self-employment profits. Alternatively, you can use a Budget Payment Plan to make payments on a regular basis during the tax year.
HMRC is known to refuse Class 2 NIC payments if they are not correctly registered as being payable (see above).
You can pay Class 3 NIC by quarterly bill or monthly Direct Debit for the current year.
Self Assessment is how you pay Class 4 NIC and the income tax payable on your self-employment profits. See How do I pay tax on self-employed income? for additional information.
How do I claim a refund of overpaid or incorrectly paid National Insurance contributions?
The total amount of NIC you must pay in a tax year is limited (across different classes of contribution). If you’ve only had one job, you shouldn’t have overpaid NIC. However, if your total earned income exceeds the weekly upper earnings limit multiplied by 53 (£967 x 53 = £51,251 in 2021/22), you may have overpaid National Insurance Contributions.
The NIC of each individual is not reconciled by HMRC. This is due to the fact that paying the incorrect amount of NIC is relatively unusual.
- You continued to work after reaching state pension age, and your employer continued to deduct Class 1 National Insurance Contributions;
- You paid Class 4 NIC on self-employment profits in a tax year after the one in which you achieved state pension age;
- When your earnings were below the Small Profits Threshold limit, you paid Class 2 NIC as a self-employed individual;
- You were both employed and self-employed at the same time, and you paid Class 1, Class 2, and Class 4 National Insurance contributions.
You cannot get a NIC refund if you stop working or do not work for the entire tax year.
Simply because you are leaving the UK to reside in another country does not entitle you to a NIC refund. Visit the migration area for further details.
How do I check my National Insurance contributions record?
HM Revenue & Customs (HMRC) keeps track of how much NIC people pay. You can look up your NIC record by going to:
- contacting HMRC’s National Insurance Enquiries Helpline (information available on GOV.UK);
Can I claim my national insurance back when leaving the UK?
You may be eligible to pay National Insurance while you’re on vacation if you plan to:
If you leave the UK permanently, you will not be able to claim back any National Insurance contributions you have made. However, if you’re moving to one of the nations with which the UK has a social security agreement, any money you’ve paid could be applied to benefits in the new country.
How do they work out National Insurance?
The amount of National Insurance you pay is calculated similarly to how income tax is calculated.
Over a ‘earnings threshold,’ national insurance is computed on gross earnings (before tax or pension deductions).
The Class 1 National Insurance threshold for 2021-22 is £9,568 per year. You will not be required to pay National Insurance contributions if you earn less than this amount.
If you make more over £9,568 a year, you must pay 12% of your earnings between £9,568 and £50,270. Any profits over £50,270 will be taxed at 2%.
How much tax do you get back when you leave the UK?
There is no limit to what you can do. The amount of UK tax you can claim back is determined by a number of criteria, including the amount of tax you paid in the UK and whether you had any other sources of income. Our clients who are leaving the UK receive an average tax return of almost £900. We’ll assist you in calculating the amount of tax relief you’re eligible for as part of our free consultation.
What happens to my pension if I leave UK?
If you have a defined contribution pension, you have two options for what to do with it if you relocate to another country. You could do the following:
Leave your pension in the UK and withdraw funds in the nation where you live, or
If you leave your pension in the UK, you will have the same options for taking your pension as if you were living in the UK. Your pension provider, on the other hand, is unlikely to pay your pension money into an offshore bank account, at least not without charging you a fee. However, your pension provider may pay your pension into a UK bank account, which you can subsequently withdraw from or transfer to another country’s account.
If you want to transfer your pension to another country, you must do it to a qualified, internationally recognized pension scheme (QROPS). If it isn’t a QROPS, you will very certainly have to pay a tax penalty, and your UK pension provider may refuse to transfer it.
To transfer a pension abroad, several conditions must be completed, and you may be required to pay fees. It’s also possible that moving it will modify the amount you get when you retire, but you’ll have to check with your provider about that.
Because transferring your pension to another nation can be complicated, it’s best to consult with a regulated financial adviser first.
Can I stop paying NI after 35 years?
Even if you’re still working, you stop paying Class 1 and Class 2 payments once you reach State Pension age.
You’ll continue to make Class 4 payments until you reach State Pension age at the conclusion of the tax year in which you turn 65.
For example, suppose you turn 65 on September 6, 2021. You’ll stop making Class 4 contributions on April 5, 2022, and pay your final Class 4 bill, together with your income tax, by January 31, 2023.
Can you pay too much National Insurance?
Every individual in a tax year is subject to what is known as a “annual maximum” of national insurance contributions. Working two or more jobs is the most prevalent circumstance in which an individual pays too much national insurance. It even applies to earners who are both employed and self-employed, implying that they may be subject to National Insurance Classes 1, 2, and 4.
If an earner has a high income, this could result in a significant sum of NIC being paid each year. As a result, there is a maximum limit that applies. Here’s an example of how this works:
During the 2017/18 tax year, Charlotte worked two jobs, earning £50,000 as a consultant at Peace Hospital and £45,000 from her consultancy work at Love Hospital.
Charlotte paid £4,520 in Class 1 NIC on her salary from Peace in the 2017/18 tax year, and £4,420 in Class 1 NIC on her salary from Love. In total, £8,940 has been paid. When this is compared to the Annual Maximum, which is computed at £5,331, a National Insurance refund of £3,609 is needed not a small sum by any means.
If you suspect you have overpaid National Insurance, the first thing you should do is contact your employer. They might be able to issue a refund through their payroll system. Alternatively, if all of the essential information is provided, a claim can be submitted directly to HMRC.
If the conditions are one-time only, and all that is required is a request for reimbursement for a single tax year, that is all that is required. However, if the conditions continue essentially the same in subsequent tax years, a claim for NIC Deferment might be filed. This simply means that on one of your jobs, you would pay National Insurance at a rate of 2% (over a specified level) rather than 12 percent. HMRC would then have to approve the claim and establish which types of jobs it applied to.
How much National Insurance do you pay UK?
The amount of National Insurance you pay is calculated as follows: 12 percent of your weekly earnings between £184 and £967 (2021/22); 12 percent of your weekly earnings between £184 and £967 (2021/22); 12 percent of your weekly earnings between £184 and £967 (2021/22); 12 percent of your weekly earnings between £184 and £967 2% of your weekly profits in excess of £967
What is NI deferment?
Employees who work multiple jobs may be eligible to defer (postpone) paying Class 1 National Insurance.
In one of your employment, you’ll normally pay a lower rate of 2% on your weekly earnings between £184 and £967. (instead of the standard rate of 12 percent ).