N I contributions

[tali122]

on wage deductions where does national insurance contributions actually go to - is it the NHS?, if so why is it seperate from income tax which i assume includes everything else the govt spends on?

[woofgang]

I understand that it doesn't actually go into pots like that also your NI contribution also covers your state pension and benefits that you might need to claim.

[buildersmate]

I believe that when NI first started it was 'sold' to the population on the basis that the money would fund the new concept called the National Health Service. This has long since ceased to be the case. Its just another form of taxation and the money goes straight into Gordon's coffers, from which the whole of Government spending is funded. Its is bit like the argument that Road Fund duty for vehicles maintains the roads. It doesn't - the collection vastly exceeds the expenditure.

Why is separate? - better ask Gordon. It could be a lot more efficient to treat it as part of income tax and just have one set of civil servants administering the collection of direct taxes. But it would also be different to convince the people and endless arguments would occur about who was better off / worse off.

[Octavius]

National insurance, or NI, is a form of tax which everyone in work must pay in order to qualify for benefits, including the old age pension. By paying Class 1 contributions (which applies to people who are employed) you are entitled to incapacity benefit, jobseeker's allowance, maternity allowance, retirement pension and widows pension (if you meet the right qualifying conditions). For most people, NI is their contribution towards their state pension. NI is calculated on your gross pay (ie before income tax is deducted).

Income tax goes into the Inland Revenue and is basically for everything else at national level such as public sector salaries, fiscal management, defence, home office, foreign office etc etc