12. Sep 2019 |
A national insurance number is supplied by the British government and it is used for some tax purposes. Anyone that is born in the UK or is a resident of the UK is assigned a Child Reference Number. When they are about to turn 16 years of age HMRC assigns the child a National Insurance number. This allows them to apply for jobs, pay certain taxes and open some savings accounts.
If you are self-employed you will need to register online. You can do this at GOV.UK, alternatively, you may wish to telephone HMRC and inform them you’re self-employed. You should register for self-employment as soon as possible. The latest date you should register is 5 October, more specifically, 5 October following your first tax year’s end.
If you are self-employed and you have made at least £6,363 in the tax year 2019/2020 or £6, 205 in the tax year 2019/2020 you will need to pay class 2 NICs (National insurance contributions).
If your profits are more than £8,632 in the tax year 2019/2020, you will need to pay class 4 NICs.
You can opt to pay voluntary NICs if you wish. Doing so will help you to qualify for the State Pension. Self-employed NI contributions can make your pension go further.
If you do not pay national insurance rates because you don’t earn enough, there’s a chance you might not get a State Pension when you retire.
The good news is you might still get some credits towards your NI record. This means that you could end up having almost a full State Pension when you retire.
You cannot stop paying National Insurance even if you have made full pension contributions. You will only stop paying self-employed national insurance when you reach pension age.
If you are working and the pension age is higher than 60 you will still pay National Insurance. If you keep working after the pension age you will not have to pay National Insurance. However, you might have to prove how old you are so your employer doesn’t take NICS from your earnings.