National Insurance: A tax with benefits? Part 1

I quite often get asked questions about National Insurance, particularly as to how it is calculated and what it is used for. In this article I give a brief overview of how National Insurance is calculated and the benefits it directly pays for. Whether or not National Insurance should be called a ‘tax’ I will leave this up to the reader.

You will note that there are no direct state benefits from paying Class 4 contributions.

National Insurance Number
You only ever get one National Insurance Number and you need to look after it! Do not share it with anybody who does not need it. Organisations that will need your National Insurance number include:

• Your employer;
• HMRC;
• Department of Works and Pensions;
• Local council – claiming housing benefit;
• Electoral registration officers;
• Student loan company;
• Pension provider and financial services companies.

In Part 2, I will cover such areas as National Insurance Contributions paid by foreign nationals whilst working in the UK and how to locate a lost National Insurance Number.

Prior to going self-employed on release remember to get your tax affairs in order
Remember to contact The Tax Academy CIC to review your tax affairs to ensure they are up to date. There is nothing worse than being released from prison and finding that you have tax penalties and tax debt that need to be resolved with HMRC, particularly when going self-employed.

Please contact Paul Retout from The Tax Academy CIC on 01824 704535 or write to me: The Tax Academy CIC, Unit 4 Ffordd Yr Onnen, Lon Parcwr Business Park, Ruthin, Denbighshire LL15 1NJ.

Paul Retout is a tax specialist, tax author and founder of The Tax Academy CIC.