National Insurance errors discussion thread

[MSE Alana]

This is the discussion thread for the MSE guide on

National Insurance Errors

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[jeanp]

I wonder if anyone knows the answer to this question...

I am self employed but also work for companies who pay my NI but not my tax. But while I'm working for them I'm still saying my self employed NI.
Does that mean I am double paying or does that get taken into account when I do my tax at the end of the year?
I have already tried asking various people who work for The taxman and NI but they seem to only have a basic knowledge of how to work a computer and keep sending me to the FAQ page no matter what question I ask them.

[222telme]

if you have paid in for more than the required number of years, 30 years, why is NI still deducted? i have found out since applying for job seekers that as i have paid in for this time, it makes no difference as to if i work and pay, or its paid via JSA, as the end result is that my state pension will not be increased even if i dont pay or continue to pay? so if you have paid in for the maximum number of years, can anything be claimed back ?

[BoGoF]

No you can't claim anything back.

Remember the 30 years is to qualify for basic state pension only.

Oh, and technically none of these 2 questions fall within the discussion topic

[markbernstein]

In the guide it says

To gain a qualifying year, you need to earn a set minimum during a tax year (April to April) and pay the required NI. For 2010-11, this is £5,044 for employees or £5,075 for the self-employed.

Is this actually true as it stands or is it shorthand for a more complex situation?

I'm asking because the statement has given me a bit of a fright. I'm semi-retired (but below pension age) and self-employed, and I'm earning less than that sum per year. I was under the impression that while I could ask not to have to pay NI contributions because of my low income, as long as I simply do pay my class 2 NI contributions those years will count as "qualifying years", whatever my actual (that is, lower) income is.

Can someone clear this up for me, please?

[wynter-rose]

I was a self employed taxi driver and after years of this and paying my tax and ni i then decided to go and work for someone else.
after a few problems within the company and the way i was treated i then resigned. then found out i was pregnant, when i went to see what i could clame i was told that all the ni i payed being self employed now dosnt count. it only count while i was working after i stoped being self employed it seems to dissapear and im not entitled to anything. how can all the years of paying my ni not count, ????????? im so confused.

[Niemand]

Originally Posted by wynter-rose

I was a self employed taxi driver and after years of this and paying my tax and ni i then decided to go and work for someone else. [...] i was told that all the ni i payed being self employed now dosnt count. it only count while i was working after i stoped being self employed it seems to dissapear and im not entitled to anything. how can all the years of paying my ni not count, ????????? im so confused.

wynter-rose, I am no expert in this, but while doing some research I came across Wikipedia's 'National Insurance' entry were it says Class 1A, 1B and 4 contributions do not count towards benefit entitlement. Furthermore, it has this to say about Class 2 contributions—which are what you pay if you are self-employed:

For the most part, unlike Class 1, they do not form part of a qualifying contribution record for contributions-based Jobseekers Allowance.

So it seems that you may not be able to claim benefits for contributions made whilst self-employed. It's certainly worth looking into further.

[CIS]

I'm asking because the statement has given me a bit of a fright. I'm semi-retired (but below pension age) and self-employed, and I'm earning less than that sum per year. I was under the impression that while I could ask not to have to pay NI contributions because of my low income, as long as I simply do pay my class 2 NI contributions those years will count as "qualifying years", whatever my actual (that is, lower) income is.

NI contributions whether paid or credited are looked at on your National Insurance records when calcualting the state pension (irrespective of your earnings). Any you are currently paying/have paid will be taken in to account.

[anniecave]

theres a difference between contributions that count towards benefits (like JSA) and contributions that count towards state pension.
Lots of types of contributions count towards the state pension (for example credits that a mother gets whilst looking after young children) but don't count towards being able to get job seekers allowance or certain other benefits.

[markbernstein]

Originally Posted by CIS

NI contributions whether paid or credited are looked at on your National Insurance records when calcualting the state pension (irrespective of your earnings). Any you are currently paying/have paid will be taken in to account.

Thanks for clarifying!

Perhaps a less short-hand (i.e., "more correct") phrasing of that point could be found for the guide?

[esperanza2]

Originally Posted by markbernstein

In the guide it says



Is this actually true as it stands or is it shorthand for a more complex situation?

I'm asking because the statement has given me a bit of a fright. I'm semi-retired (but below pension age) and self-employed, and I'm earning less than that sum per year. I was under the impression that while I could ask not to have to pay NI contributions because of my low income, as long as I simply do pay my class 2 NI contributions those years will count as "qualifying years", whatever my actual (that is, lower) income is.

Can someone clear this up for me, please?

CIS is right with the reply that all the NI you have paid or had credited counts towards your pension. Also it might make it clearer to know that the difference is connected to how the payment information gets on the records.
For employees - employers send details in at the end of every tax year showing how much each employee was paid and also how much NI was deducted. It's actually the earnings figure that is used to work out benefits rather than the NI paid. (And there is a small band of earnings - this tax year between £97 and £110 weekly ( £421 to £476 monthly etc) - where no NI has to be deducted but the pay still counts for benefits.)

For self-employed - you send the tax office your own earnings details on a self-assessment return. Your profit from self-employment is the figure the tax office use to work out what Class 4 national insurance you need to pay (if any - this year Class 4 is due if your profit is £5715 or more). But it's the Class 2 contributions that you pay during the year that count for benefits (pension and other benefits but not JSA). Class 2 is £2.40 a week this year. Like you say if your profits are low (below £5075 this year) you can choose whether or not to pay them- but if you do pay then they count for benefits.

One other difference is that it is possible for an employee, depending how much they earn, to have a 'qualifying year' for benefits even if they don't work for the full year. But because Class 2 is a flat rate amount per week you have to pay 52 weeks in a tax year for the year to count for benefits. (Any gap could be made up by credits or employee earnings in the same year though)

Hope that helps (anyone still awake?! )

[markbernstein]

Many thanks, esperanza2!

[allancwevans]

Hi, My wife worked at woolworths until it went under. She found a tempoary job but is now unemployed. She went to sign on for Job Seekers but was told there was a gap in her NI for 2008/2009 so she cannot receive the allowance. She cannot find her P60 or wage slips - is there anything she can do?

[pondy23]

Me and my girlfriend work in a casino.
We have recieved tips for the last 2 years where we have been in a tronc with a troncmaster.
National insurance has been taken from our tips in the first year.
I have been informed that NI deductions on tips should not have happened.
How do me and my girlfriend claim the NI back that we shouldnt have paid? Thanks for your time,
Regards Jeff

[esperanza2]

Originally Posted by allancwevans

Hi, My wife worked at woolworths until it went under. She found a tempoary job but is now unemployed. She went to sign on for Job Seekers but was told there was a gap in her NI for 2008/2009 so she cannot receive the allowance. She cannot find her P60 or wage slips - is there anything she can do?

I would say to put as much detail as possible in a letter to

HM Revenue & Customs
National Insurance Contributions Office
Longbenton
Newcastle upon Tyne
NE98 1ZZ

It would be better if you could find some records so have a good hunt for the p60 or the wage slips . But if you can't find them ask your wife to just write down as much as she can remember (how long she worked there/ hours worked/rate of pay etc also her NI number and the branch of woolworths she worked at. Include in the letter that the query is urgent because a benefit claim is depending on the outcome.

Also it would be a good idea to send a copy of the letter to the benefits office and say you would like the claim to be held open until the enquiry has been sorted out.

Stay on the case and you should get the correct benefit sorted out.

[esperanza2]

Originally Posted by pondy23

Me and my girlfriend work in a casino.
We have recieved tips for the last 2 years where we have been in a tronc with a troncmaster.
National insurance has been taken from our tips in the first year.
I have been informed that NI deductions on tips should not have happened.
How do me and my girlfriend claim the NI back that we shouldnt have paid? Thanks for your time,
Regards Jeff

I realise this thread is wandering off from the original subject but just to say you should both probably write to the National Insurance Office as well (Benton Park View, Newcastle upon Tyne NE98 1ZZ)
give as much detail as you can and say you think you have overpaid NI.

They'll probably want to check that nothing changed in the way tips were paid out in the two years so if you can give some information about that, include it in the letter. Hope that sorts it out.

[sha_sks]

Hello folks,

I started my first ever job on 1 November 2010 and my gross YTD pay to 31 March 2011 amounts to £10,756.31. The YTD NI deduction of £921.38 has been applied to my salary. I just wish someone to confirm if the deduction is correct. I suspect (probably wrongly) that YTD NI deduction from my salary is not correct and I seem to have overpaid the NI for the year 2010/11. Of course, I would not be asking this if I understood all of this but I need to have a peace of mind, as I need every penny to reduce my debts incurred in acquiring my degrees. I’d be grateful for your opinions and help.

[chrisbur]

Originally Posted by sha_sks

Hello folks,

I started my first ever job on 1 November 2010 and my gross YTD pay to 31 March 2011 amounts to £10,756.31. The YTD NI deduction of £921.38 has been applied to my salary. I just wish someone to confirm if the deduction is correct. I suspect (probably wrongly) that YTD NI deduction from my salary is not correct and I seem to have overpaid the NI for the year 2010/11. Of course, I would not be asking this if I understood all of this but I need to have a peace of mind, as I need every penny to reduce my debts incurred in acquiring my degrees. I’d be grateful for your opinions and help.

To check NI acurately you need to give all the monthly gross figures, as NI is calculated on a monthly basis not annual as tax is. Assuming that you recieved five monthly payments and you are paying NI at the not-contracted out rate then this looks about right.

[henzerani]

Hi
I'm also asking a question that probably doesn't quite fit into this thread.

I work part time because I look after my daughter and my wife works full time.

So far as I can tell I have earned above the minimums mentioned in Martin's article (£5044) and NI deductions are sometimes made. I checked recently and was advised that my NIC is sufficient to qualify me for state pension.

However, in March I damaged my back and was off work for 2 weeks. I had only been with one employer for 3 weeks at that point and the other employer only employs me for 8 hours a week. Both did not pay me SSP for that period but sent me an SSP1 form. I submitted these to my benefit office but was turned down on the basis that my NI contributions over the past 2 years were insufficient. One of the contracts has since finished and I am back in the same position.

My question is (finally) : what happened? I checked with the NI helpline who said my contributions were sufficient for pension. And my benefits office tell me that I don't qualify for benefit. Who should have told me my contributions were insufficient and how can I find out what I should pay?

[molerat]

You need a total of 30 years contributions for a full state pension but many benefits whilst working are based on the previous 2 year's contributions.