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 you get national insurance refund?
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 withdraw my NI contributions?
If you are a non-resident of the United Kingdom who pays national insurance, you may be entitled to a return of the class 1 national insurance contributions deducted from your wages.
National insurance contributions are collected by the tax office to pay for items like pensions and are deducted automatically by your employer through the PAYE system on a monthly or weekly basis.
In rare cases, you may be eligible for a national insurance refund, but only if you meet certain criteria.
Can you claim back NI when leaving 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 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
Can I claim back National Insurance student?
You are allowed to earn up to £12,570 in a tax year without paying any tax. Anything earned above that will be taxed at a rate of 20% for the majority of students.
Income tax bands in Scotland
This includes any money you earn while working abroad during the summer. You pay your tax to the UK rather than the country you’re working in because you’re a UK resident working abroad on a temporary basis. It’s a good idea to check in with HMRC before going abroad to work to make sure they’re aware of your situation.
If you earn more than £184 per week, you’ll have to pay National Insurance contributions in addition to income tax.
You can’t receive money back for overpayment National Insurance contributions, but keep in mind that all of your NI payments go towards services like the NHS and the State Pension, so you’ll ultimately get your money back!
What happens with 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.
Does the UK know when you leave the country?
Under a scheme being phased in at ports and border crossings, data on all travellers leaving the UK is being collected and passed over to the Home Office. All passengers departing by commercial air, sea, or train are being recorded by transportation personnel.
How much tax can I claim back if I 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.