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National Insurance (NI) in the United Kingdom was initially a contributory system of insurance against illness and unemployment, and later also provided retirement pensions and other benefits.[1] It was first introduced by the National Insurance Act 1911, and expanded by the government of Clement Attlee in 1946. It is currently the second largest source of tax,[citation needed] amounting to an addition 20% income tax at middle bracket incomes.[citation needed] HMRC provide an online National Insurance Calculator.[2]
The contributions component of the system consists of mandatory contributions, National Insurance Contributions (NICs), paid by employees and employers on earnings, and by employers on certain benefits-in-kind provided to employees. The self-employed contribute, partly by a fixed, weekly or monthly payment, and partly on a percentage of net profits. Individuals may also make voluntary contributions, in order to fill a gap in their contributions record.
The benefit component comprises a number of contributory benefits of availability and amount determined by the claimant's contribution record. Weekly income benefits and some lump-sum benefits to participants upon death, retirement, unemployment, maternity and disability are provided.
see: http://en.wikipedia.org/wiki/National_Insurance
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