NATIONAL INSURANCE CONTRIBUTIONS

General | Payment of National Insurance Contributions | National Insurance Credits | Contributory Benefits

If you live in the United Kingdom you should visit the UK Department of Work and Pensions website - we can only deal with queries concerning the Isle of Man.

General

Most people who work have to pay National Insurance contributions.

There are four classes of contributions and in the course of a person's working life they may need to change from one class to another or pay more than one class at a time.

The level of a person's contribution and the rules regarding payment depend on the Class of contribution they pay.

Class 1 - Paid by employed earners and their employers
Class 2 - Paid by self-employed earners
Class 3 - Paid voluntarily by persons not liable for any other Class of contribution
Class 4 - Paid in addition to Class 2 contributions by self-employed people whose profits are above certain levels
Class 1, 2 and 3 contributions count for various National Insurance benefits.
Class 4 contributions do not count for any benefit

Earnings Factors

For a tax year to qualify for contributory benefit purposes, an insured person must pay sufficient contributions at either the Class 1, 2 or 3 rate to achieve the required Earnings Factor set each year, or to have had earnings from employed earner's employment at least equivalent to the lower earnings level (LEL) which is set each year, even though contributions have not been paid on those earnings.

An earnings factor is a figure which represents the amount of earnings on which contributions have been paid or treated as paid.

Payment of National Insurance Contributions

Employed earners' Class 1 primary contributions are collected by their employer who deducts the appropriate amount from their pay.

Class 1 and Class 4 are usually collected by the Income Tax Division. Class 2 and Class 3 contributions are collected by the Contributions Section of the Department. Click here for an application form to pay Class 2 contributions.

To count for benefit purposes, contributions must be paid within strict time limits. There is also a time penalty if contributions reckoning for a particular benefit claim are not paid until the time of that claim.

National Insurance Credits

To the extent necessary to make up a qualifying year, Class 1 credits can be awarded to you instead of having to pay contributions if you are -

claiming Jobseeker's Allowance (even if you are not entitled to it in certain circumstances)
claiming Incapacity Benefit (even if you are not entitled to it in certain circumstances)
entitled to
- Maternity Allowance
- Carer's Allowance
- Disability Working Allowance
- Family Income Supplement
on an approved training course
required to attend jury service and did not have earnings at or exceeding the Lower Earnings Limit from employed earner's employment
a man aged over 60 who is not employed
in receipt of a compensatory payment such as a payment in lieu of notice or a payment in lieu of remuneration
aged 16, 17 or 18 in that tax year.

Contributory Benefits

The Class of NI contributions paid affects the benefits a person can get.

The benefits for which the fulfilment of contributory conditions are necessary are as follows

Contributions taken into account

Class 1	Class 2	Class 3	Benefit
Yes	No	No	Jobseeker's Allowance
Yes	Yes	No	Incapacity Benefit
Yes	Yes	No	Maternity Allowance
Yes	Yes	Yes	Bereavement Payment
Yes	Yes	Yes	Widowed Parent's Allowance
Yes	Yes	Yes	Bereavement Allowance
Yes	Yes	Yes	Retirement Pension (basic)
Yes	No	No	Additional Pension