Earning NI Qualifying years - working part of the year

xylophone

I agree with the poster who said it is impossible to find out what constitutes a qualifying year. The rules assume consistent pay patterns weekly or monthly. I get paid on a sessional basis for any hours I work that month. So far I have earned enough each month to pay NI, but there will be some months in the year when I get no work for 3 weeks so will not earn the lower earnings limit that month. I want to know if I will get credited with NI so long as my annual earnings exceed the lower earnings weekly limit x 52. Does anyone know ?

https://forums.moneysavingexpert.com/discussion/comment/71234294#Comment_71234294

intalex

Old thread I know, but this info seems perpetually relevant and therefore useful...

Say if someone was leaving their job in April 2019 to move abroad for the rest of the tax year 19/20, and had April 2019 salary and final holiday pay adding up to more than the annualised tax year 19/20 LEL of £6,136 all paid through April 2019 payroll, would this make the entire tax year a qualifying year?

Or does the monthly UEL act as a cap in each month, in which case is it better to delay leaving their job in early May 2019 so the final holiday pay and some salary both get paid in May 2019 payroll, and overall benefits from 2 months' UEL cap which I think then exceeds the annualised LEL?

noh

The UEL acts as a cap. Therefore the minimum period over which you can obtain a full years contribution is 2 months.

Anonymous101

Interesting to know. I'm planning on timing my retirement to hopefully retire as soon as I reach the full pension contributions. So the final year will be as short as possible for me.

intalex

noh wrote: »

The UEL acts as a cap. Therefore the minimum period over which you can obtain a full years contribution is 2 months.

Very useful and decisive information!

pensionpawn

I was also wondering this. Is there a way of telling through your payslip if you have paid enough NI to qualify for a full years contributions? Would earning of £8632 (52 x £166) be sufficient, which for someone on around £40k pa would be achieved in just less than three months? Reason being, if you were offered redundancy part way through your last qualifying year, is there any way of knowing that you have made sufficient qualifying payments to date?

pochisoldi

pensionpawn wrote: »

I was also wondering this. Is there a way of telling through your payslip if you have paid enough NI to qualify for a full years contributions? Would earning of £8632 (52 x £166) be sufficient, which for someone on around £40k pa would be achieved in just less than three months? Reason being, if you were offered redundancy part way through your last qualifying year, is there any way of knowing that you have made sufficient qualifying payments to date?

My method:

You need all your payslips for the tax year.
Find the gov.uk page containing "Rates and thresholds for employers"
(2018/19 - see https://www.gov.uk/guidance/rates-and-thresholds-for-employers-2018-to-2019#class-1-national-insurance-thresholds )

Scroll down to Class 1 National Insurance thresholds
Identify the following figures:
LEL - the "per year" figure
Your relevant UEL figure - depends on how often you get paid
Monthly paid: "per month"
Weekly: "per week"
Fortnightly/4 weekly: "per week" multiplied by 2 or 4.

If you are a company director, skip to the bottom.

Step 1:
Go through all the payslips, checking the taxable pay for the period.
Split the slips into two piles
Pile A: More than your UEL figure,
Pile B: less than your UEL,

Step 2:
Count the number of payslips in Pile A
If this is more than 2: STOP - You already have your year in the bag.
If you have just one payslip, then continue

Step 3
Add up the gross pay for all payslips in pile B
If you had a single payslip in pile B, add your UEL figure to the tally.
If this figure is greater than the LEL "per year" then you have your year in the bag.

intalex

noh wrote: »

The UEL acts as a cap. Therefore the minimum period over which you can obtain a full years contribution is 2 months.

Just to clarify this even further, the quickest way to a qualifying year in 2 months is as follows:
M1 - Earn a minimum of: monthly UEL (£4167 for TY19/20)
M2 - Earn a minimum of: annual LEL minus monthly UEL (£6136 - £4167 = £1969 for TY19/20)

This can be in reverse order too.

GibbsRule_No3

As someone who gets their State Pension in this NI/Tax Year March 2020 but will pay 11 months not 12 NI. I am really surprised that it cannot be worked out, even pro rata, if need be, to allow these 11 months towards a contracted out year/part year for SP.

nigelbb

GibbsRule_No3 wrote: »

As someone who gets their State Pension in this NI/Tax Year March 2020 but will pay 11 months not 12 NI. I am really surprised that it cannot be worked out, even pro rata, if need be, to allow these 11 months towards a contracted out year/part year for SP.

None of the contributions are counted in the year that you become eligible for the state pension. With a March birthday you will lose out by this system whereas those who have a birthday in April are the winners.