Almost everyone who works in the UK must pay two different taxes on the money that they earn; these are called Income Tax and National Insurance Contributions.

What is National Insurance?

National Insurance is a compulsorily tax that all UK residents must pay if they are employed or self-employed and between the ages of 16 and 65, if they are male, or 16 and 60 if female.

You pay National Insurance Contributions (NICS) to build up your entitlement to certain social security benefits, such as the State Pension, Jobseeker’s Allowance and Incapacity Benefit. How much you get from the government will depend directly on the size of your NIC contributions.  They also go towards the cost of the National Health Service.

How much will I pay?

In 2010, if you are an employee (you work for a company or individual) and you earn between £97 and £844 per week, you will pay 11% of this amount in NICs, this amount is known as ‘Class 1’. Further to this you will pay an additional 1% of all earnings above £844 a week, also known as ‘Class 1 NICs’. However; you will pay a lower amount if you are a member of your employer’s pension scheme.

Like Income Tax, your NICs will be lower if you are self-employed. As a self-employed person you will be charged a flat weekly amount of £2.40. Additionally you will pay 8% on any annual taxable profits between £5,715 and £43,875 and a further 1% on any taxable profit over this amount.

Changes to National Insurance contribution from 2011

The new government has announced that the employee, employer and self-employed rates of Nationa Insurance contribution (NICs) will increase by 0.5 per cent from April 2011 in addition to the 0.5 per cent increase announced in 2008. Besides, the level at which people start to pay NICs will increase as well. The threshold will increase by £570 from April 2011. Employees who pay the standard rate and earning under £20,000 will pay less NICs overall as a result of these changes.

How do I pay?

NICs works in exactly the same way as Income Tax, if you are an employee your employer will deduct the amount you owe from your weekly or monthly pay. If you are self-employed then you will be charge directly by the tax office (Her Majesty’s Revenue and Customs). In order to do either you will first need a National Insurance Number.

Your National Insurance Number is essential for living and working in the UK and you must apply for one as soon as you start work, or as soon as you or your partner claim benefit. To do this you should call the NI allocation service helpline, in 2008 the telephone number is                      0845 600 0643          .

You will probably be asked to visit your local office for an ‘evidence of identity interview’ where they will check your identity and fill out an application form, they should then issue you with your personal number on a National Insurance Card.

This number will ensure that the Income Tax and NICs you pay are properly recorded on your account, and will also act as your personal reference number for the whole social security system, so it is easy to see why it is so important. Because of this it is important that youkeep the number safe and private, in-fact the only people you should ever show it to be:

•    HM Revenue & Customs (HMRC)
•    your employer
•    Jobcentre Plus, if you claim Jobseeker's Allowance
•    your local council, if you claim Housing Benefit

USEFUL WORDS

social security benefits = money that the government pays regularly to people who are poor, unemployed, sick etc.
contribution = a sum of money that is given to a person in order to help them pay for something
entitlement = the official right to have or do something
allowance = an amount of money that is given to someone regularly or for a particular purpose
earn = to get money for the work that you do
deduct = to take away money from a total amount
earnings threshold = the amount at which you start paying tax
reference number = a number which connects a person to a piece of information
pension scheme = a system where you, and usually your employer, pay money regularly into a fund so that you can receive money when you retire

ENGLISH GRAMMAR

Do and Make

Use do to stand for any action, or when talking about a task:
I’m afraid I’ve done something silly
We’re just doing the paperwork to apply for an NI number

The basic meaning of make is ‘produce’ or ‘create’:
I was just making a cup of tea
They’ve made a new Harry Potter film
The company makes a small profit

Use make in these structures:
Peter made this table (made = created)
Peter made me this table (made = created)
Peter made this table for me (made = created)
A week in Paris would make a nice break (make = be)
The music made me sad (made me sad = caused me to become sad)
The music made me cry (made me cry = caused me to cry)

There are many idiomatic uses of do and make:
Do your homework
Do a course or subject
Do your best
Make sure you don’t make a mistake

A common idiom is to do with, meaning ‘connected with’:
The boss wants to see you.  It’s something to do with an email