[Friendly Ferret]

Hey guys, I've just found this forum. Good stuff. We're some way down the road with this immigration lark now and we should be able to move downunder some time next year. Reading through the threads I thought of a question that I hadn't before. Do you pay UK national insurance in Australia? I know that you don't need to but if we came back the UK for some reason I don't want do have missed out on my pension because I hadn't paid enough contributions? What do you think?

[Cliff]

You don't have to pay NI insurance in Australia. It's purely a British tax and once you have emmigrated you do not have to pay it.

The age pension in Australia is income and asset tested and has a residency requirement. Essentially you will have to have been a permanent resident and have been living in Australia for at least 10 years before you can qualify for the age pension.

http://www.centrelink.gov.au/internet/internet.nsf/payments/age_residence.htm

At the moment there is no reciprocal social security agreement between Australia and the UK. My understanding of this is that the years you spend in Australia will not count towards your NI contributions for the UK pension.

I am not sure if you can make voluntary NI contributions to the UK to cover the possibility of you returning to the UK in later life. It's something that is best checked by a phone call the Dept of Work and Pensions.

http://www.thepensionservice.gov.uk/ipc/countries/australia.asp

[Friendly Ferret]

Thanks Cliff I followed your links and it got me to here http://www.hmrc.gov.uk/pdfs/nico/ni38.pdf.

Looks like I could voluntarily pay class 3 contributions while I'm in Australia. Not sure I'll want to do this but I know the option's there now.

You can pay voluntary Class 3 NICs to protect your right to
State Pension and, if you are married or in a civil partnership,
your spouse’s or surviving civil partner’s right to bereavement
benefits. Although these benefits are payable anywhere abroad,
they are not normally increased when pension rates go up in the
UK. In addition, these contributions do not count towards
contribution-based Employment and Support Allowance,
Incapacity Benefit or Maternity Allowance.
You can pay Class 3 NICs whether you are working abroad or not,
but not for the period you are liable to pay Class 1 NICs.
You can pay Class 3 NICs abroad:
• if you have paid Class 1 NICs for the first 52 weeks of your
employment abroad, or
• you satisfy either of the following conditions
— you have lived in the UK for a continuous three-year period
at any time before the period for which NICs are to be paid.
(If you have lived or worked in another EEA country or in
Turkey, time spent there might help you to meet this
condition), or
— before you went abroad, you paid a set amount in NICs for
three years or more (this will be checked when you ask to
pay Class 3 NICs).
If you want to apply to pay Class 3 NICs while you are abroad, fill
in and return the application form CF83 at the back of this leaflet.

[vine]

I don't think I'd keep paying National Insurance if there was a chance I was leaving for good. If you get fed up and leave Aus after a few years, can't you then pay extra in the UK to make up for the time you were out of the country?

[Thongs of Praise]

I agree with vine. Also, having a look at the government debt position in the UK right now, I'd not be surprised if the entitlement age for a state pension ended up at 70+.

[jimjams]

I can't think helping that National Insurance is a big scam. People think the tax rates in Britain are 20%, 40% and now a 50% band. They forget to add on another 11 or 12% for NI. Why doesn't the government just call it income tax and tell people what the true rates of tax in the UK are?

[FamousFive]

I can't think helping that National Insurance is a big scam. People think the tax rates in Britain are 20%, 40% and now a 50% band. They forget to add on another 11 or 12% for NI. Why doesn't the government just call it income tax and tell people what the true rates of tax in the UK are?

It's even more dishonest than that jimams and another good reason for me to have moved. A lot of people don't realise that for each person they employ, businesses have to pay NI contributions for that person too.

That's why people call National Insurance a tax on jobs.

So, you can take your 20%, 40% and 50% tax bands, add on 11% for employee national insurance then add on another 12.8% for employer national insurance.

In this year's budget report, it was announced the employee contributions would rise to 12% and employer contributions would rise to 13.8% in 2011. What a great way of making employers move overseas!

[kay and pete]

Hi,

I'd like to know if there is any kind of equivalent tax in Australia to the UK's National Insurance contributions? If you are an employee do you pay income tax on your wages and that's it – or are there other taxes deducted?

Thanks, Kay

[Cliff]

As well as income tax there will also be a medicare levy deduction. This is normally 1.5% of your income. For higher earners who have no private health care insurance, the levy increases to 2.5%. The actual higher income thresholds vary according to how many dependants you have. For a family, the higher income threshold starts at $146,000. The ATO has more details on this page: http://www.ato.gov.au/individuals/pathway.asp?pc=001/002/030