National insurance contributions

loulou41

Does anybody know how Many weeks of nic you must make to count as a whole year of contribution? E. G if that person has worked only 7 months in a year. Thanks

Triumph13

You just need to earn £5,824.

xylophone

https://forums.moneysavingexpert.com/discussion/5495808

Deneb

I am currently wondering how gross income is determined for NI purposes, since in my Personal Tax Account its states that HMRC only receive details of total taxable income from an employer, not gross income.

This matters to me this year since I retired shortly after the start of the tax year. My gross employment income for this year was over £5,824 but my taxable income, which is what is recorded in my personal tax account, was a few pounds short of that amount.

As I understand it, I should be credited with a full year's contributions for 2017-18 since my gross income was over the LEL, but how do HMRC become aware of that if they only know that my taxable income was less than £5,824? Do they calculate it from the NICs that I have already paid?

GunJack

^^ If you retired (taking state pension) then don't think 17-18 would be a qualifying year anyway..someone should be able to confirm this.

badmemory

I'm sure Gunjack is correct that NI in the year you attain state pension age does not count towards your state pension.

Deneb

Sorry, I didn't make that clear. I'm 60, six years until SPA. I have been drawing one of my pensions since 54 (protected pension age of 49) which exceeds my personal allowance, and my employment income for this year was all taxed at BR.

I can pay a maximum of five more years voluntary NICs, but I am hoping that 2017-18 will be credited. I have been contracted out my entire working life and current SP estimate is £128.01 a week to April 2017.

badmemory

Deneb wrote: »

Sorry, I didn't make that clear. I'm 60, six years until SPA. I have been drawing one of my pensions since 54 (protected pension age of 49) which exceeds my personal allowance, and my employment income for this year was all taxed at BR.

I can pay a maximum of five more years voluntary NICs, but I am hoping that 2017-18 will be credited. I have been contracted out my entire working life and current SP estimate is £128.01 a week to April 2017.

In which case you may have a small amount to fund but nowhere near the full year.

Deneb

badmemory wrote: »

In which case you may have a small amount to fund but nowhere near the full year.

Why? National insurance is calculated on gross earnings, before tax or pension deductions as I understand it. My gross earnings are over £5,824. But HMRC state in the Personal Tax Account website that they are only informed of taxable income by employers and do not receive information about an individual's gross income.

So how can they determine that my gross earned income was between the LEL and UEL? Is it extrapolated from the record of NICs already paid, the amount of which I believe is calculated on gross earnings, in my case on a month by month basis, as that it how I was paid?

I was also under the impression that you can't just buy sufficient NICs to "top op" what you have already contributed if that amount is insufficient. I though that you either had a qualifying year or not, and if not, no matter how much NI had already been paid, the only option was to buy a full year or do nothing.

Happy to be corrected if that's wrong though!

molerat

If you have not paid enough for a full year they will credit you with x weeks and you will be able to top that up to 52.

greatkingrat

HMRC receive details of amounts earned between the various NI thresholds for calculation of state pension entitlements, as well as the taxable pay.

Here is an example of the form employers used to send in at year-end (albeit it is now all done electronically in real time)

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/373060/p14-p60-man-2013-14.pdf