Summary

The UK has a comprehensive social security system which provides a range of old age, invalidity, unemployment and other social benefits, including family allowances and income guarantees. Entitlement to benefits generally derives from an individual’s National Insurance contribution history, although some benefits arise due to residence in the UK.

Access to the UK National Health Service is not dependent on having paid UK National Insurance; rather, it is accessible through UK residence and long term ties.

Details

Contributions

Employers pay contributions at 13.8% on all earnings over £9,000 per year. Employees pay 12% on earnings between £12,500 and approx. £50,000 per year, and 2% on earnings above that level.

Treaties

The UK has a multilateral social security agreement with the countries of the EU under the Trade and Cooperation Agreement. It has separate treaties with the non-EU EEA countries, plus 16 other countries, including the US, Canada and Japan.

These agreements determine which country has the right the levy social security contributions, has the obligation to provide benefits, and prevent social security being levied twice on the same income. Most inbounds expatriates to the UK therefore continue to pay home country social security rather than UK contributions, although there is a cost benefit to paying UK contributions rather than paying, for example, French or Italian contributions, and this can be facilitated by assignment structuring.

Exemptions

Individuals assigned into the UK from non-agreement countries, and their host companies, will generally be exempt from UK National Insurance for the first 52 weeks of presence in the UK.

Certain tax exemptions (for example, that relating to expenses associated with temporary duty in the UK for assignments of up to 2 years) can also be effective for National Insurance purposes.

Administration

For most employees, contributions need to be calculated and paid over via a UK payroll, usually of the UK host company. For individuals liable to UK National Insurance but without a host employer, a special scheme can be set up to facilitate payment of the employee contributions.

Benefits

UK social security benefits are wide ranging but are not high. The state pension – currently worth up to £10,000 per year - is payable pro-rata after 10 years of contributions have been made to the UK’s (or treaty country’s) social security system, and full entitlement comes from 35 years of contributions.

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