NI in the 1980's

drumtochty

The other half has a year 1981 1982 where she did not get a full NI conrtibution to her state pension / SERPS, she was paying Class 1 NI contributions but maybe only six months that year.

As the primary threshold did not come into being until 2000 2001which is the annual earnings where you start to pay NI, how was NI calculated in the eighties.

On all earnings up to the upper earnings limit or on earnings above the lower earning limit.

JezR

In 1981-2 the LEL was £27 pw, UEL £200.

NI was 7.75% on all earnings to the UEL, if above the LEL.

drumtochty

Thanks JezR can you confirm my reading of your reply.

Pay £26 a week no NI that weekas it is below the £27 a week LEL.

Pay £200 a week, NI is £15.50 per week as that is 7.75% of the £200 pay as the weekly pay was above the £27 a week LEL.

Or was it £200 less £27 therefore £173 X 7.75% equals £13.40

Most historical web sites seem a bit confused with both rates and explanations of worked examples

zagfles

drumtochty wrote: »

Thanks JezR can you confirm my reading of your reply.

Pay £26 a week no NI that weekas it is below the £27 a week LEL.

Pay £200 a week, NI is £15.50 per week as that is 7.75% of the £200 pay as the weekly pay was above the £27 a week LEL.

Or was it £200 less £27 therefore £173 X 7.75% equals £13.40

Most historical web sites seem a bit confused with both rates and explanations of worked examples

It was on the whole lot, ie your first calculation.

They changed it later to apply a lower rate to earnings below the LEL, then they abolished that completely so it was nothing on earnings below the LEL, then later nothing on earnings below the PT which was higher than the LEL.

So you have the riduculous situation where some people pay no NI yet get NI credits (for instance those earning between the LEL and PT all year), and you get those who do pay NI but get no credits (for instance those who earn above the PT for part of the year but below the annual LEL over the whole year).

JezR

Yes at that time the LEL was not so much a 'NI free allowance' as a 'NI qualification threshold'. Earnings below it you paid nothing and were credited with nothing; above you paid on your whole earnings.

drumtochty

Zagfles

You explanation ties in as in 85 86 they first used the lower rate NI contribution rate below the LEL and in that year the good ladies NI contribution from the NI log the Ni people sent us was lower than previous years but she still got a years NI credit.

Thanks both of you for your quick and useful posts