National Insurance (NI)
National Insurance is paid in proportion to your salary level (to fund state health and benefit services alongside the state pension). Not only do you have to pay Employees NI, but also as a contractor you are also liable to Employers NI.
Your employer will require you to inform them of your National Insurance (NI) number which is needed to ensure your contributions are properly allocated. If you are new to the UK and do not yet have a NI number, then Parasol can assist in explaining the process which relates to an application and usually an interview. We can use a temporary number in the short term but this would potentially not provide you with state benefits until the correct number is allocated.
The rate you receive for the work being done is subject to tax and National Insurance, and like tax; you are allowed to earn a certain amount of pay before NI is due each pay period. There is both Employers NI and Employees NI, when contracting you cover both these elements via a (usually) increased rate of pay.
Employees NI used to be capped so that you would not pay more than a certain amount of NI. This is no longer the case and Employers NI is also not capped.
Your Agency/Umbrella/Ltd Co pays over the NI contributions each month to HMRC.
