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.
What happens to NI contributions when you move abroad?
When you travel to one of the following countries, you will either pay National Insurance in the UK or social security in another country:
Barbados, Bermuda, Bosnia and Herzegovina, Canada, Chile, Guernsey, Isle of Man, Israel, Jamaica, Jersey, Kosovo, Mauritius, Montenegro, New Zealand, Philippines, Republic of Korea, Serbia, Turkey, United States of America
If you’re self-employed or working for a UK employer
If you’re working in the UK for a short period of time and you’re either:
A certificate of continuing obligation will be required by you or your employer as proof that you are not required to pay social security contributions in the nation where you are working.
If you pay social security in the country you’re going to
While you’re paying social security abroad, you might be entitled to make optional class 2 National Insurance contributions.
- whether you choose to return to the UK or stay in a foreign country, your State Pension
How much tax can I claim back when leaving 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.
Can National Insurance be refunded?
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);
What happens to my pension if I leave the 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.
What will happen to my UK pension after Brexit?
We will only ask for information if you are claiming a UK benefit from the EU, EEA, or Switzerland, and the UK is the country from where you may be able to claim benefits.
The revised regulations for claiming benefits and pensions for UK nationals living in the EU, Iceland, Liechtenstein, Norway, and Switzerland, which take effect on January 1, 2021, have been amended in this guideline. It confirms that the UK State Pension will be enhanced in line with the rate paid in the UK each year in the EU. It defines which benefits you are eligible for if you permanently relocate to the EU. It also explains what proof people residing in the EU by the end of 2020 may need to collect UK benefits.
If you file a new claim for specific benefits or pensions, or if you report certain changes of circumstances on or after 1 January 2021, you may need to provide additional proof to verify that you were residing in the EEA or Switzerland by 31 December 2020.
The section under “Moving to an EEA state or Switzerland from January 1, 2021” has been updated.
Do I have to tell HMRC when I leave a job?
When one of your employees leaves or retires, you must notify HMRC and deduct and pay the appropriate tax and National Insurance.
Can I withdraw my National Insurance 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.
Do I need to inform HMRC if I leave the country?
To ensure that you pay the correct amount of tax, you must notify HM Revenue and Customs (HMRC) that you are moving or retiring overseas.
When can I claim back tax?
If you have paid too much tax, or ‘overpaid’ tax, and you file a tax return, HMRC should offer you a refund once your return has been completed – see the question How can I claim back tax if I file a tax return? for more details.
You can still recover back overpaid tax if you don’t file a tax return in certain circumstances. In these pages, we go over the most prevalent ones in further detail.
What information is in these pages?
Getting a refund for a simple tax overpayment should be simple enough to do on your own. However, how you go about it will be determined on the type of income you have.
More thorough information about repayments for various groups can be found in the following sections of this website:
- If you are a pensioner and believe you have overpaid tax, such as on your purchased life annuity income or because you have taken cash or a lump amount from your pension flexibly, you should go to the pensioners section.
- You should go to the migrations area if you are a migrant who is leaving or has already left the UK.
- If you were employed but left halfway through the tax year for any reason, or if you want to claim a refund for employment expenses, proceed to the employment section.
- Go to our National Insurance website for information on refunds of overpayment or erroneously paid National Insurance contributions (which is uncommon).
How do I work out if I have paid too much tax?
To determine whether you have paid too much tax, calculate your tax burden and compare it to the amount you have paid.
To begin, gather all of the information you can about your income and tax situation. The following documents for the tax year may be included:
- Statements of account (or certificates of tax deducted from certain types of interest income)
- Creating statements for society (or certificates of tax deducted from certain types of interest income)
- Statements detailing the amount of statutory interest paid and the amount of tax deducted from that interest as part of a PPI claim.
How do I work out my tax liability?
To determine your tax liability, you must first determine your taxable income. In your calculations, you must include the gross amounts, that is, the amounts before tax is deducted.
Depending on your gross taxable income, you may be entitled to deduct certain expenses or claim allowances.
To work out your tax overpayment or underpayment, you must first calculate your tax liability using the right tax rates, and then deduct the tax you have already paid, such as under Pay As You Earn (PAYE).
On our page How do I work out my tax?, we provide an example tax computation and explain the stages involved in calculating your tax bill.
If you live in Scotland and are a Scottish taxpayer, your non-savings and non-dividend income is taxed at separate rates and bands. More information about Scottish income tax can be found in our section on the subject. Savings and dividend income are subject to UK rates and bands.
HMRC has a ‘tax checker’ tool that can help you figure out if you owe money in taxes.
If your tax situation is uncomplicated, this is a beneficial tool for you. If your tax situation is more complicated, such as if you get taxable state benefits, it may not provide an accurate conclusion.
If you decide to utilize the HMRC tool, make sure you read the instructions thoroughly beforehand. This describes who is eligible to utilize the tax checker and what information should be gathered.
What are the time limits for claiming back tax?
As indicated here, you have four years from the end of the tax year in which the overpayment occurred to obtain a refund. If you do not file a claim within the time limit, you will forfeit any refund owed to you, and the tax year will be closed to new claims.
HMRC may accept to issue reimbursements for years prior to 2017/18 under their ‘Extra-statutory Concession B41’ in circumstances of ‘official error.’ See the table below for more information about this concession.
What can I do if I am too late to make a claim for a repayment?
If you believe you overpaid tax in tax years that are no longer open to claims, you may be eligible for a refund from HMRC under the Extra-statutory Concession B41 rule.
This exemption only applies in cases where HMRC or another government department, such as the Department for Work and Pensions, has made a mistake in your tax affairs and the facts of the matter are clear.
‘…refunds of tax will be given in respect of claims made outside the statutory time limit when an over-payment of tax has occurred as a result of an error by HMRC or another Government Department, and where the facts are not in dispute…’
HMRC rarely grants this exception in our experience, therefore you will need to provide convincing evidence of the error that resulted in you paying too much tax.
We’ve created an example letter for you to use when writing to HMRC about a B41 repayment.
How long does it take to get a refund?
This is a common query. The answer varies from 5 to 8 weeks, depending on a variety of criteria such as the method used (for example, PAYE or Self Assessment), whether you applied online or on paper, and whether HMRC conducts any security checks during the process. To learn more, see our news story.
Tax refund scams
It is a scam or phishing if you receive such a communication purporting to be from HMRC.
Phishing occurs when a person sends a false email or text message claiming to be from a reputable company (in this case, HMRC). They’re made to steal your personal and financial information or infect your machine with malware.
The HMRC website has some helpful tips on how to spot a fraud and recognize phishing emails.
HMRC does not send SMS messages to people about tax refunds. Although the government uses technology to detect fraudulent text messages and prevent them from being distributed, some will still be conveyed.
To make scam SMS appear authentic, the sender may be listed as ‘HMRC’ rather than a phone number.
Do not respond to the message or click on any links, as you would with other scam emails.
Any phishing or scam emails you receive or suspect should be forwarded to the HMRC phishing squad.
- Visit our ‘protecting yourself online’ page for more information on the many types of online scams as well as links to online safety advice.
Remember that HMRC will never send you an email or text message informing you of a tax refund.
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.