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what is national insurance?

National Insurance is essentially a tax on money you earn. If you are unemployed, or earning below a certain level, you will not have to pay National Insurance. However, if you are earning more than a minimum amount (£110 per week in 2010/11) you will have to pay National Insurance whether you are employed or self-employed.

For people in employment, your employer also pays National Insurance on your behalf. This does NOT come out of your wages, but is a cost to the business.

Self-employed people are responsible for paying their own National Insurance.

You stop paying NIC when you reach state retirement age which at the moment is 65 for a man and 60 for a woman.

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