Taxation

This section covers income tax, National Insurance Contributions, and how to get a National Insurance number.

Income Tax

People in the UK pay tax on their income, which includes:

• Wages from paid employment
• Profits from self-employment
• Taxable benefits
• Pensions
• Income from property, savings and dividends

Income tax revenue funds government services like roads, education, police and the armed forces. For most employees, the right amount of tax is automatically deducted from their pay and sent to HM Revenue & Customs (HMRC) — a system called "Pay As You Earn" (PAYE). Self-employed people pay their own tax through "self-assessment," which includes filing a tax return. If HMRC sends you a tax return, it's important to complete and return it promptly.

National Insurance

Almost everyone in paid work in the UK, including the self-employed, must pay National Insurance Contributions. This money funds state benefits and services, including the state retirement pension and the NHS. Employees have contributions deducted automatically by their employer; self-employed people pay their own.

Getting a National Insurance Number

A National Insurance number is a unique personal account number that ensures your tax and National Insurance Contributions are recorded correctly against your name. All young people in the UK receive one automatically just before their 16th birthday.

Non-UK nationals living in the UK who are looking for work, starting work, or becoming self-employed will need a National Insurance number — though you can actually start work before you have one. If you have permission to work in the UK, you'll need to call the National Insurance number application line; you'll then receive a letter from the Department for Work and Pensions (DWP) inviting you to a National Insurance number interview at a Jobcentre Plus, along with a list of documents to bring proving your identity.

Check That You Understand

• The system of income tax and National Insurance
• What a National Insurance number is and how to get one