Job and Pension - NI Implications?

OurKev

I guess I'm not the only one in this position, but I didn't manage to find anything by searching here.

Basically, I'm in work and also started getting an occupational pension from previous employment late last year, I'm in my fifties.

The salary from my main job is paid as normal, nett of income tax and NI.

My pension is paid with a 20% tax deduction, but no NI deduction.

I understand that I may need to complete a tax format the end of this tax year (borderline higher rate tax when both combined for a full year, so will normally owe the taxman a bit).

What I'm not clear about is the handling of NI.

Does anyone know if this will be included with the tax form, or if I have to do something else.

There is also another complicating factor - a significant part of my salary is dependant on the performance of myself/the company I work for. This means that one or two months per year my salary may be a lot higher than the other months, resulting in me exceeding the NI threshold (and overall paying a bit less NI than if I got the same salary each month, when I would never go over the threshold).

Sorry if I haven't explained too clearly, but I'm hoping that there will be somebody on here who is in a similar position and will know exactly what I mean!

Thanks

ceeforcat

I think, firstly, that you are wondering how to account for NIC on your occupational pension. If so, you need not worry - it is not liable to NIC whatsoever.

In the second case, provided you are not a director, you also have no concerns. The receipt of bonuses which take you over the NI threshold for the month does mean that you pay NIC at 2% on part of your earnings - that is simply how NIC is calculated. You do not have to address this imbalance in months were you do not pay the maximum NIC at the higher rate.

AirlieBird

NI is not payable on pension income so don't worry about it. NI works differently to income tax as it is based on income over the pay period not over the year like income tax. So it doesn't matter whether your income fluctuates between pay periods, you won't owe any more NI for going over the threshold one month and not the other months.

OurKev

Thanks very much for both your prompt replies, you've put my mind at rest!

I'd assumed that because I'm still below the national retirement age, the pension would be treated as regular income (but had wondered why the pension company hadn't mentioned NI).

I'm not a director, luckily in this case.

Cheers

Kev