Paying taxes in the U.K. is a tradition that has been practised since the formation of the country. There is no tax on National Insurance, only contributions. U.K. taxpayers must correctly calculate their National Insurance contribution, also referred to as the National Insurance Tax, in order to dodge trouble with Inland Revenue. Overpayment of the National Insurance may lead to personal loss due to late discoveries. A refund will be issued for overpayment once the discovery has been made.
Determine your employment status. You are considered employed if you have a boss and are paid by the hour. You are considered self-employed if you have no boss, have your own business and hire people.
Calculate 11 per cent of your income if you are employed and make between 110 and 844 pounds a week. For any amount over 844 pounds per week, add 1 per cent. Your required contribution is zero if you earn less than 110 a week.
Calculate 2.4 pounds a week plus 8 per cent of taxable profits if you are self-employed and earn between 5,715 and 73,875 pounds per year of taxable profit. Add 1 per cent for any amount over 43,875.
Do not confuse earnings with taxable profits.
Failure to provide National Insurance contributions will result in the forfeiture of benefits.
Tips and warnings
- Do not confuse earnings with taxable profits.
- Failure to provide National Insurance contributions will result in the forfeiture of benefits.