Search

College Life

Tax and National Insurance Explained

National Insurance

National Insurance Contributions are payments which most people make towards the National Health Service and to enable them to get entitlement to some social security benefits and state pension.

For employed earner, contributions are paid as a percentage of income above a certain level. Self-employed people pay a set weekly rate and, if their profits are high enough, a percentage of their income. Someone who is unemployed or unable to work through sickness may have contributions credited.

The Inland Revenue and Departments for Work and Pensions (DWP) use your National Insurance number to identify your contribution and benefit record. The number always consists of two letters, six numbers and a letter e.g. AB 123456 C.

How to apply for a National Insurance Number if you are employed or looking for work.

The law says that you need a National Insurance (NI) Number when you have started work. You must give your employer your NI Number to use for payroll purposes.

If you are looking for work in the UK you can also apply for a National Insurance Number before you start employment.

To apply for your NI Number you should telephone 0845 600 0643

The call centre will book you an appointment at a local Jobcentre and will advise you what documents to bring with you when you attend.

Your local National Insurance team is based at:

Brighton Jobcentre Plus
Windsor House
30-35 Edward Street
Brighton
BN2 0LN

Income Tax

Income Tax is deducted from your earnings which is paid to the government. The government department in charge of collecting tax is the Inland Revenue.

If you work for an employer your tax and National Insurance will be paid automatically. It comes straight out of your wages before you receive them. This is known as Pay As You Earn (PAYE).

Everybody can earn a certain amount (known as the Personal Allowance) before they start paying tax and National Insurance. The figure changes yearly.

The number in your tax code is usually three figures. It represents the total of all available income allowances, minus any amount to be deducted to cover other income or benefits and with the last digit removed. The allowance as shown by the number in the tax code is then rounded up. The letter indicates what kind of tax it is e.g. L means Basic Tax Allowance.

For example, if your total income is £9,992, of which £4,895 is taxable, your code is 489L