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Tax and National Insurance
Tax
When people talk about tax they usually mean income tax which is a percentage of your earnings. But tax affects nearly everyone. From the price of a packet of biscuits, which includes Value Added Tax (VAT) at 17.5 per cent to special taxes such on items like alcohol, cigarettes and petrol. Even some benefits are taxed.
Tax is your contribution to the goods and services that the Government provides for the population (roads, education etc!).
The amount of income tax you pay depends on the amount you earn in the tax year (from April to April of the next year) and any other income you may have.
Unless you are self-employed, tax will be automatically deducted from your earnings by your employer and paid directly to the Inland Revenue. This is known as Pay As You Earn (PAYE). Self-employed people have to fill in their own tax forms and pay the Inland Revenue at the end of each tax year.
National Insurance (NI)
Before your 16th birthday you will receive your national insurance card and number. Like income tax, national insurance contributions depend on the amount you earn, and this is calculated by your employer.
Your NI contributions will be deducted from your salary every time you are paid, so you will be asked for the number when you start a new job or training scheme.
What you contribute helps pay for government social services like health and state pensions.
If you do not receive a card call the National Insurance Registration service on 0845 91 57006 (Monday to Friday, 8:30am - 4.30pm).
