National insurance and health insurance contributions
What you will learn
Are national insurance contributions and income tax the same charge?
These are compulsory payments governed by rules separate from income tax, related to the social security and health systems.
National insurance operates allowances and pensions according to eligibility, for example in childbirth, disability and unemployment. Health insurance contributions are related to funding the health system. This does not mean every medical service is provided without additional payment. The liability depends among other things on age, status and the type of income; workers, self-employed and those not working may have different rules. Children and teenagers have relevant arrangements and exemptions — do not automatically apply an adult’s calculation to them.
If a sample pay slip shows two different deductions for national insurance and for health, record each one once. Do not add the total amount of both again.
Are national insurance contributions and income tax the same charge?
A fictional learning payslip shows income of 5,000 and three deductions of 100, 150 and 200. Subtracting them leaves 4,550 units, but the amounts alone do not reveal which is income tax, social insurance or health insurance. Read each line’s name and period, and distinguish employee deductions from employer costs. These are invented practice amounts, not official rates; they do not form a complete payslip or calculate anyone’s personal entitlements.
Concepts that help you compare
Gross, net and tax brackets
Gross is the amount before deductions; net is the amount that remains after the relevant deductions. Income tax on work has brackets: a higher rate may apply only to the portion that exceeds the bracket threshold, not to the entire salary. Tax credit points and benefits may reduce tax. A pay slip may also include national insurance, health and pension contributions. Pension is savings and a contribution, not simply another tax. Age, income, status and additional conditions affect calculations; do not use the example as a real salary calculator.
Comparison example: Made-up example for learning: up to 1,000 ₪ there is no tax, and on an additional 200 ₪ there is 10%. The tax is 20 ₪, not 120 ₪. These are not the tax brackets in Israel.
Pension savings pool money intended for the long term and are invested according to the track and rules. Pension savings help fund life after retirement. Contributions are invested over working years under the chosen plan and its rules. Fees and insurance cover also matter; this is not freely available spending money. Investments may include listed shares, bonds and other assets, sometimes also unlisted companies. Assets affect risk and liquidity, and returns are not guaranteed.
Comparison example: A fund can hold a traded share, and at the same time exposure to a private investment fund. The assets differ in transparency, liquidity and risk.