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Taxes and National Insurance

Study note

People in the UK pay taxes, and this money funds public services such as the NHS, schools, roads, the police and the armed forces. One of the main taxes is income tax, which is charged on a person's earnings and other income, for example wages, profits from self-employment, and some pensions and savings. The more you earn, the more income tax you generally pay.

National Insurance is a separate set of contributions paid by workers. National Insurance contributions help pay for state benefits and the State Pension, and they also support the NHS. Value Added Tax, known as VAT, is a tax added to the price of many goods and services that people buy. For the test, remember that income tax is paid on earnings, while National Insurance helps fund benefits and the State Pension.

Memory tip: Income tax on earnings; National Insurance funds benefits/pensions; VAT on goods.

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Question 1 of 2

What does National Insurance help to pay for?

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Show all questions and answers for Taxes and National Insurance(2 questions with explanations)

Taxes and National Insurance: questions, answers and explanations

  1. 1. What does National Insurance help to pay for?

    • Television sets
    • Benefits and the State Pension
    • Private holidays
    • Football tickets

    Correct answer: Benefits and the State Pension

    National Insurance contributions help fund benefits and the State Pension.

  2. 2. Income tax is paid on what?

    • The number of children you have
    • Your nationality
    • A person's earnings
    • The weather

    Correct answer: A person's earnings

    Income tax is charged on a person's earnings and income.

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