NI Contributions

glosgal

I am 59 tomorrow and have worked all my life since the age of 15 without having any time out for bringing up children. As I am coming up to retirement albeit in a couple of years, I have been informed that I will get the highest state pension available because of the NI i have paid in. So, why do i have to keep paying NI if i am not contributing to my state pension? I know i'm a little thick where these things go, but prescriptions, dentists or opticians are not free so what will i be getting for the rest of my NI contributions. I don't wish to come across as moaning just need advising of how these things work.

CLAPTON

NI is simply a form of taxation
it doesn't actually go to any specific benefits

bilbo51

National Insurance contributions pay for the following state benefits:

• the basic State Pension
• the additional State Pension, sometimes called the Second State Pension
• Jobseeker's Allowance - the 'contribution-based' element
• Employment and Support Allowance - the 'contribution-based' element
• Maternity Allowance
• bereavement benefits - Bereavement Allowance, Bereavement Payment and Widowed Parent's Allowance

edinburgher

National Insurance contributions pay for the following state benefits:

Maternity Allowance

I guess you're helping to support the parents of the next few generations of doctors and nurses who will help keep you alive to a ripe old age?

sha_sks

Hello folks,

I started my first ever job on 1 November 2010 and my gross YTD pay to 31 March 2011 amounts to £10,756.31. The YTD NI deduction of £921.38 has been applied to my salary. I just wish someone to confirm if the deduction is correct. I suspect (probably wrongly) that YTD NI deduction from my salary is not correct and I seem to have overpaid the NI for the year 2010/11. Of course, I would not be asking this if I understood all of this but I need to have a peace of mind, as I need every penny to reduce my debts incurred in acquiring my degrees. I’d be grateful for your opinions and help.

Loughton_Monkey

glosgal wrote: »

I don't wish to come across as moaning just need advising of how these things work.

It is simple.

National 'Insurance' has been mis-named for years. It is not a form of Insurance at all, but long ago became simply yet another form of taxation over and above Income Tax, VAT, Fuel Duty, Corporation Tax, Stamp Duty..........

Others (above) have named other things that are said to be covered by NI. However, technically that's not true. What they mean is that your rights to certain things (like JSA) are dependant upon certain NI contributions. But they are not paid directly from NI.

When something is paid directly from a specific tax, it is called 'hypothecation'. If, for example, Road Tax was collected and put into a seperate pot to pay for roads, and roads only, then that would be 'hypothecation'.

The British Government never (to my knowledge and belief) hypothecates. It does, I believe, steadfastly refuse ever to do so.

JoeCrystal

Well, from working out your pay over the time, I am assuming you are on salary of £26,000. In this case, the National Insurance over the year is £2,230.80. So yes, that sound right to me... Divided that by 365 with 151 days (for simplicity's sake), equals £922.87. But Listentotaxman calculator is not perfect.

t999mrb

If income tax and NI are combined then how will this impact retired people who pay no NI eg pensioners including those retiring from 55 years old

Pollycat

I've not seen anywhere on this thread that says income tax & NI are 'combined'.
A couple of posts make the point that NI is 'just another form of taxation' but it's not income tax per se.

When you retire, you don't pay NI (unless you opt to pay voluntary contributions).

You do, however, pay income tax if your income is above the amount you are allowed to earn before you have to pay tax i.e. your 'personal allowance', which for 2010-11) is £6,475 if you're uner 65.

http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/WorkingAndPayingTax/DG_10016783

bilbo51

Pollycat wrote: »

I've not seen anywhere on this thread that says income tax & NI are 'combined'.

The post was referring to current government thoughts on merging tax and NI in order to 'simplify' UK taxation...

Have a link: http://www.spectator.co.uk/coffeehouse/6799758/why-osborne-is-so-interested-in-merging-income-tax-and-national-insurance.thtml

Pollycat

bilbo51 wrote: »

The post was referring to current government thoughts on merging tax and NI in order to 'simplify' UK taxation...

Yeah, thanks - it always helps if posters are very clear about what they mean when they post......