Tuesday, November 11, 2008

No Taxation without Representation - Importance of the NI Number

Since I want my blog to actually be somewhat useful to other poor bloakes that plan to jump across the pond to the UK, I want to discuss the importance of the NI Number (National Insurance Number). As soon as you get here and start work, set an appointment with the nearest Job Centre and obtain one! Your employer should tell you all about it upon your arrival. If they don't, ASK! The number registers you as a UK worker and allows you to pay the fair tax rate into the National Insurance (actual rates vary and depend on your salary, marital status, etc.). Until you get one however, you are taxed under an "Emergency NI" which means you pay ridiculously high taxes in the interim, seriously upwards of 55 to 65 percent of your gross.

The good news is that once you receive an NI number, you get the over-taxed amount back in your following pay period, but it's shocking at first when you see what the Queen takes from you initially as an "emergency tax". This is fairly standard. Another piece of good news is that the process isn't as painful as people here would make you think. All week I've been warned about going to my appointment at a Job Centre in "dodgey" Tooting (apparently the Brits think this is a bad neighborhood...It's rough for sure, but I just moved here from Oakland...Oakland helped perfect "rough"). To be fair, I didn't stick around long to explore, so maybe it's bad. I did stick around long enough to have a fantastic sheekh kebab wrap at a legitimate Indian takeaway stand for just 1.50 pounds. Not bad, not bad at all. That experience alone is worth a future tube ride back to Tooting Bec.

These Job Centres are largely utilized to help unemployed people on the UK public assistance program. They are also used for expats like myself that need to obtain a National Insurance Number to prevent the Crown from taxing the hell out of them, so the crowd is a very mixed bag. My impression is that if I had made an appointment at a Job Centre near Canary Wharf, I would have been in line with people from Lehman, Merril, and Bear Stearns. Instead, in Tooting, I was definitely with "working class" people who were probably legitimately looking for good, noble, and honest work, not investment banking jobs.

Once you arrive to your appointment time and location, it isn't really that bad. Just be sure to bring everything under the sun that identifies you. I suggest you bring your passport/UK visa, work permit, copy of pay stub, confirmation of UK bank account, confirmation of UK residence (temporary and/or proposed lease is fine), signed employment contract, and offer letter. After all of this, they will mail you your NI number within 10 business days...

If you're moving to the UK with a current employer (a transfer) I suggest the following:

Negotiate full tax support. I get tax support with PwC and it's worth it. The taxes get really complicated out here and it will be very difficult to try to muddle through it all on your own. After a couple of years, I'm sure we all figure it out, but you could lose a lot of sanity and a lot of money in the process.


1 comment:

  1. U.S. expats should make VERY SURE they don't forget to file their TD F 90-22.1 before Jun 30, 2009 for the 2008 tax year.

    This is NOT part of your "Apr 15" 1040 stuff, but a standalone document with potentially enormous penalties ("the civil penalty amount is limited to the greater of $25,000 or the entire balance in the account")