Yes, it goes in the general tax pot, but it's still called national
insurance. Although you don't have to worry about coverage, you very much still have to pay.
> Employers advertise pay rates from which the tax is deducted, so in that way they are the same as contracting rates (the tax is deducted from both).
Yes, this is correct for income tax and the employees portion.
> Employers also pay a small National Insurance contribution on top, which doesn't come out of your wages.
The problem is that it's not a small contribution on top, it's 12.8% above a low threshold. For a £35k salary, it's just under £3,800 - see http://www.listentotaxman.com/. And as a contractor, you have to pay that for yourself.
