Students and National Insurance Contributions

If you are a student and you work to supplement your income, you may have to pay National Insurance contributions.  The amount that you pay depends on how much you earn and whether you are employed or self employed.  You pay them in order to build up an entitlement to state benefits such as Jobseeker’s Allowance or the State Pension.

Our guide looks at when you have to pay National Insurance contributions and how much you pay.

Do students pay National Insurance?

If you’re an employee or if you’re self employed and you’re aged 16 or over, you will pay National Insurance contributions if your earnings are above a certain level (see below).

You pay contributions up to the State Pension Age (65 for men born before 6 April 1959 and 60 for women born before 6 April 1950, although this is gradually increasing to 65 for women between 2010 and 2020.)

You can also elect to pay National Insurance contributions voluntarily if you aren’t working and are not claiming state benefits.

Do students need a National Insurance number?

Yes.  Your National Insurance number is unique to you and makes sure that the National Insurance contributions and tax you pay are properly recorded on your account. Your National Insurance number is made up of letters and numbers and looks like this:

• AA 34 56 78 A

Your National Insurance number never changes and you will need to provide it to your employer if you’re working part time as a student.  If you don’t have a National Insurance number you can apply to get one.

When do students pay National Insurance contributions and at what rate?

If you’re employed you will pay Class 1 National Insurance contributions if you earn above a certain level.  In the 2011/12 tax year, this level is £139 per week.

If you earn between £139 and £817 per week, you pay 12% of the amount you earn between £139 and £817.  If you earn over £817 per week you also pay 2% of all your earnings over £817.

If you earn under £139 per week, you’ll pay no National Insurance contributions.

Your contributions are deducted from your wages by your employer.

If you’re self-employed you pay Class 2 and Class 4 National Insurance contributions. In the 2011/12 tax year you pay Class 2 National Insurance contributions at a flat rate of £2.50 a week.  Class 4 National Insurance contributions are paid as a percentage of your annual taxable profits.

You pay 9% on profits between £7,225 and £42,475, and a further 2 per cent on profits over that amount.

You pay Class 2 National Insurance contributions either monthly or six monthly by Direct Debit and you pay Class 4 National Insurance contributions when you pay your Income Tax.