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Practical differences between National Insurance and tax

22 January 2024 / Jeremy Mindell
Issue: 4921 / Categories: Comment & Analysis , National Insurance , NICs , Income Tax
Vive la différence!

Key points

  • Twenty-five years after the disappearance of the Contributions Agency tax and National Insurance remain substantially different.
  • National Insurance contributions are required for individuals to receive a state pension and some other benefits.
  • Self-employed workers pay different rates of National Insurance and these are however worked out on an annual basis.
  • Social security agreements allow for international mobile employees to be subject to National Insurance/social security in only one jurisdiction.

In the month where primary National Insurance contributions (NICs) are being reduced from 12% to 10% but income tax remains the same it would seem appropriate to revisit the practical differences between National Insurance and tax.

Many years ago I collaborated with specialists who had trained with the Contributions Agency before it was merged into the Inland Revenue (as it then was). They would always stress how different the NIC system was from income tax. Even today...

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