National Insurance Contributions Query

Tiners

Hi,
Can anyone confirm that I've got the correct understanding regarding NI contributions... That if you earn between £112-£155 per week you don't have to pay NI and you are automatically credited with contributions... but if you earn less than £112 per week you AREN'T credited and are presumably supposed to make voluntary contributions?

This makes very little sense to me?

The reason I ask is my sister has been doing seasonal work for the last 4 years, earning around £140 per week for 9 months a year, if averaged out over the full 12 months this equates to less than the £112 per week minimum, so she has unwittingly not been paying any NI contributions..

She has recently been diagnosed with Stage 3 Inflammatory breast cancer and has been told due to her lack of NI contributions for the preceding 2 tax years she won't qualify for any benefits.

Darksparkle

If she doesn't have sufficient NI contributions then she won't be entitled to contributions based benefits (I assume she is looking to claim esa?).

Only the last 2 years are relevant for contributions based esa, 2014/15 and 2015/16:

"You qualify for contributory Employment and Support Allowance (ESA) if you have paid sufficient National Insurance contributions. There are two contribution conditions you must meet:

First contribution condition - in one of the last two complete tax years, you must have paid Class 1 or 2 contributions on relevant earnings at the lower earnings limit for at least 26 weeks. This means you must have worked for at least 26 weeks of the last two complete tax years; and
Second contribution condition - in both of the last two complete tax years, you must have paid or been credited with, Class 1 or 2 contributions to the value of 50 times the lower earnings limit."

If not eligible for contribution based benefits she may be able to claim other benefits but will depend on her household circumstances, the specifics of her condition etc.

She could use a benefit calculator such as entitledto or you could post more info.

E.g. Is she seasonal or term time?

Is she off sick from work? Does she receive sick pay?

Does she have a partner? If so do they work, what do they earn etc.

Any children?

Rent/mortgage?

Tiners

Thank you for the speedy reply Darksparkle, I'll try and give concise answers/further info...

-Yes it was ESA she was trying to claim, but, as you say, that's contributions based, on your last 2 years (In her previous job she was paying around £900 a year NI for 15 years, but apparently that counts for nothing in this case)


-She has been doing seasonal work, around £140 per week from Feb-Oct, but I'm assuming in this case her earnings are calculated over a full year, hence bringing her average wage to below the £112 per week where you get automatically credited with NI contributions?

-Yes she is off sick but her employer has told her she doesn't earn enough for them to be obligated to pay her sick pay?

-Her husband works 30 hours per week and comes out with around £220 per week after tax and NI.

-No children

-No mortgage, house owned outright


I've had a quick look at her NI record for the last 4 years on the GovGateway website and that is showing NI shortfalls but they are seemingly random figures for each year, despite her earnings staying roughly the same...

2015-16 £183
2014-15 £55
2013-14 £235
2012-13 £570

I'm still struggling to understand the logic behind anyone earning £112-£155 having their NI contributions credited, whilst anyone earning less than £112 has to pay the voluntary contributions indicated above??

Thank you in advance for any further replies from anyone, it is very much appreciated, I do have to go out to work now so won't be able to add any further until I'm home again this evening.

sammyjammy

It won't help with entitlement to ESA but she should have been credited with NI for the weeks that she worked, National insurance is paid oor not paid on what you earn in a week not annually. Does she have payslips from her seasonal work? If she was paid cash in hand its possible this wasn't reported to HMRC by her employer hence the missing credits.

Tommo1980

I can't help with the NI query, but as Darksparkle has suggested put your sisters household details into a benefit calculator.

There are other benefits she may be entitled to that don't depend on NI contributions. PIP would be a significant one as it is not means tested and would bring other entitlements if successfully claimed.

Tom

Darksparkle

I'd imagine that the logic was not to reward those who choose not to work or only earn a small amount with NI contributions unless there is a reason for having little to no income e.g. Those with young children, disabilties etc can get no contributions if on certain benefits.

Is there a reason why she couldn't work full time before her diagnosis?

TELLIT01

Tiners wrote: »

-Yes it was ESA she was trying to claim, but, as you say, that's contributions based, on your last 2 years (In her previous job she was paying around £900 a year NI for 15 years, but apparently that counts for nothing in this case)

You are correct in your statement that NI contributions in previous years counts for nothing when claiming benefit. The rights and wrongs of that are potentially a different matter, but that is how the law currently stands.
She would have had to pay, not be credited with, NI Contributions for a defined period in the 2 qualifying years in order to claim contribution based benefit. From what you say, she has unfortunately not done that. Therefore there is no entitlement to conts benefit. It's as black and white as that. There is no discretion for processing staff to look at previous years.
When I was working on benefit processing I heard the same complaint many times and, whilst I have enormous sympathy with people in that situation, there was nothing I could do. I also had situations where a claimant would have had entitlement to Contributions based benefit if they had claimed when they became ill. Instead they had lived off savings because 'I didn't think it was right to claim when I had savings', and only claimed when they realised how little they had left. They would then discover they no longer had an entitlement to Conts based benefits because they hadn't worked in the qualifying years.
To get the most out of the benefits system, you need to decide from day one that you are not going to work, or if you do - don't save a penny.

Darksparkle

WTC wouldn't have given her NI credits unless she was self employed with a small earnings exception.

Full list of benefits with ni credits is here - https://www.gov.uk/national-insurance-credits/eligibility

I do understand where you are coming from but if someone chooses to work part time on a low wage why should they get their NI paid for when they could work more?

ESA is based on employee contributions, not employers contributions (the criteria is post above).

Darksparkle

Voluntary contributions are Class 3, they contribute to state pension, not contributions based benefits.

sammyjammy

It won't help with entitlement to ESA but she should have been credited with NI for the weeks that she worked, National insurance is paid oor not paid on what you earn in a week not annually. Does she have payslips from her seasonal work? If she was paid cash in hand its possible this wasn't reported to HMRC by her employer hence the missing credits.

sheramber

sammyjammy wrote: »

It won't help with entitlement to ESA but she should have been credited with NI for the weeks that she worked, National insurance is paid oor not paid on what you earn in a week not annually. Does she have payslips from her seasonal work? If she was paid cash in hand its possible this wasn't reported to HMRC by her employer hence the missing credits.

She is only entitled to credit if she earned over the lower limit for that week.

Has she not been credited?

The figures given are the shortfall in the credits for the year, not the amount that has been credited.