State pension qualifying year calculation

crunchie1

I am very confused how to calculate this. I thought the qualifying amount for 2014/2015 was earnings of £5772 per year. This is the lower earnings limit. But many websites give the qualifying amount as £7956 for 2014/2015.

I will qualify for the current tax year but am worried about next tax year. I am likely to earn about £5500 over six months. That either gives me a shortfall of £272 or £2456 depending on which is the correct limit.

But how do I then calculate the amount I need to top up ? Do I divide the shortfall by the weekly lower earnings limit to give the number of weeks shortfall, then pay the minimum per week for that number of weeks ? Or do I owe for the whole six months I do not earn ?

SnowMan

crunchie1 wrote: »

I am very confused how to calculate this. I thought the qualifying amount for 2014/2015 was earnings of £5772 per year. This is the lower earnings limit. But many websites give the qualifying amount as £7956 for 2014/2015.

I will qualify for the current tax year but am worried about next tax year. I am likely to earn about £5500 over six months. That either gives me a shortfall of £272 or £2456 depending on which is the correct limit.

But how do I then calculate the amount I need to top up ? Do I divide the shortfall by the weekly lower earnings limit to give the number of weeks shortfall, then pay the minimum per week for that number of weeks ? Or do I owe for the whole six months I do not earn ?

I am assuming you are employed not self employed.

To get a qualifying year for 2015/2016 you need to have earned more than £5,824.

If you earn your £5,500 over 6 months (uniformally) then you will get about 49 qualifying weeks (5500/5824 x 52) so will have to pay for the 3 weeks to get it treated as a qualifying year. Each missing week will cost £14.10 to buy so you may be looking at around £42.

Note earnings for any pay period (e.g. monthly if you are paid monthly) where you have earned less than £112pw equivalent will be ignored. So if you consistently earned say £211pw every week then all the earnings would be included, but if your earnings fluctuated from week to week and you had a particular week where you earned £100 (and were paid weekly) that particular week would be ignored.

And any earnings for any period where you have earned more than £815pw equivalent will only be taken into account up to £815pw, the excess will be ignored.

But if you earn the £5,500 uniformly over 6 months neither of the previous 2 paragraphs will apply to you to any material affect. So in summary you are looking at about 3 weeks owing.


Note the £7,956 or £153pw figure looks like the primary threshold for 2014/5015 which is the point above which employee national insurance is paid, which is a completely different thing. Essentially someone can consistently earn a bit below this (between £111pw and £153pw in 2014/2015) and still get a qualifying year even though they have paid no employee national insurance during the year.

crunchie1

I am very grateful for such a clear and detailed reply. Without the detail I could not have worked out what was happening. I did not know about the ignored amounts. I will earn the money consistently but a part month at the beginning or end could be ignored if I am unlucky, depending how the dates fall.

I had hoped to have some from April for the current spell of work, which I finish on the third of April. Unfortunately the payroll department have just informed me they have paid my April pay, plus 20 days holiday pay in my March payslip !