National Insurance Contributions (NIC)

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Definition of 'National Insurance Contributions (NIC)'

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National Insurance Contributions (NICs) are a type of tax that is paid by employees and employers in the United Kingdom. The money is used to fund the National Health Service (NHS), as well as other government programs such as state pensions and unemployment benefits.

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The amount of NICs that you pay depends on your earnings and your National Insurance category. There are four National Insurance categories:

* Class 1: Employees pay Class 1 NICs on their earnings. The rate of Class 1 NICs is 12% of earnings between £184 and £967 per week, and 2% of earnings above £967 per week.
* Class 2: Self-employed people pay Class 2 NICs. The rate of Class 2 NICs is £3.05 per week.
* Class 3: People who are not employed or self-employed can pay Class 3 NICs voluntarily. The rate of Class 3 NICs is £15.20 per week.
* Class 4: High earners who are self-employed pay Class 4 NICs. The rate of Class 4 NICs is 9% of profits above £9,500 per year.

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You can claim a National Insurance rebate if you have paid too much NICs. You can also claim a refund of NICs if you have lost your job or if you have been ill.

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For more information on National Insurance Contributions, you can visit the government website.

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