HMRC and National Insurance

The NI number consists of two letters, six digits and a letter (such as QQ 12 34 56 C) and is used to record your contributions for pension and benefits.

• If you are new to Britain and want to work you may not have a number yet, and can begin work by proving the right to work, then apply on GOV.UK Apply for a National Insurance number (or by calling the designated number) and the number reaches you by post within weeks.
• Do not pay anyone to help you with that, since the application is free.
• An interview is sometimes required.
• Give the number to an employer, HMRC and DWP only, and keep it secret since it is used in fraud.
• If you lose it look for it on the payslip, P60, HMRC letters or via your personal account in the HMRC app.
• And the number does not prove your right to work.

On starting work the employer gives you a starter checklist and enrols you in PAYE, and you get a tax code such as 1257L that determines how much of your income is tax-free (12,570 pounds a year, the personal allowance).

• Income tax is deducted monthly from your salary at rising rates: 20 percent on the part above the personal allowance to about 50,270, then 40 percent, then 45 percent above about 125 thousand (Scotland differs).
• And Class 1 National Insurance is deducted (about 8 percent on the part between 12,570 and 50,270).
• The employer gives you a payslip monthly, and when leaving work you get a P45, and at year end a P60.
• Check the tax code, and if it is wrong (such as an emergency code or 0T) you may pay more, so contact HMRC to correct it and reclaim the excess.

If you work for yourself (self-employed) and earn more than 1000 pounds a year, or have rental, investment or other large income, you must register with HMRC and submit via Self Assessment online.

• You register by 5 October after the end of the tax year, and submit the return by 31 January, and pay the tax on the same date (and advance payments may be requested in January and July).
• You keep records of income and expenses (invoices and receipts) for years.
• You pay income tax and Class 2 or 4 National Insurance according to your income.
• And failing to submit on time exposes you to an immediate penalty (100 pounds) then greater penalties.
• You can use an accountant or software (such as QuickBooks and Xero) or free services.
• And value added tax (VAT) is registered if your turnover exceeds about 90 thousand pounds.

Create an account on HMRC online or download the HMRC app to follow your NI number, tax code, contributions and payments.

• You can request a tax refund if you paid extra or your job ended mid-year or you paid work expenses.
• And there are reliefs: the Marriage Allowance transferring part of the personal allowance between spouses, Tax-Free Childcare supporting childcare fees (the government adds 20 percent), Child Benefit for families with children, Working Tax Credit which moved to UC, and the Personal Savings Allowance on interest.
• And you may be exempt from tax if your income is below the personal allowance.
• For help call the HMRC line or use organisations such as the Low Incomes Tax Reform Group (LITRG) and Citizens Advice, and TaxAid for the needy.
• And for the newly arrived there are special provisions on tax (residence and source of income).

Fraud in HMRC's name is widespread: text messages, email or calls claiming that you owe tax or are due a refund and asking for your bank details or immediate payment by cards or cryptocurrency or threatening arrest.

• HMRC does not do that.
• Do not click links and do not reply, and end the call and enter the GOV.UK site yourself.
• Report scam messages by forwarding them to phishing@hmrc.gov.uk, and texts to 60599.
• Keep copies of all your messages and payments.
• Pay taxes only via the official account.
• And record 31 January and 5 April in your calendar.
• And if you face difficulty paying contact HMRC early and ask for a Time to Pay plan.
• And do not rely on intermediaries claiming to recover taxes for a large percentage, since applying is free.

When does the tax year end?