Earning NI Qualifying years - working part of the year

intalex

intalex wrote: »

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.

Just talked to someone from the HMRC NI team who said that it is possible (without details of how) to get a qualifying year with just 1 month's payroll deduction depending on earnings for that 1 month.

He wouldn't say conclusively that I qualified with just 1 month's payroll this (19/20) tax year, but said they'd review it after the end of the tax year and then decide whether it's a qualifying year or whether they'd allow me to pay voluntary contributions.

tigerspill

intalex wrote: »

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.

This is really useful.
I assume these are gross earnings?
If so,
I have done the reverse in that in April my gross was £1942. And in May I had a redundancy payment (much was taxable and included NI payment as part go PILON). So in effect I earned over the ULL.

So I think this means I am just £27 short for this tax year. Is this correct?
This is the last year I need to get the full SP so I am guessing I should make the voluntary payment. Do you know how this payment would be calculated given that I am so close to achieving the full year's contribution?
In effect I think I am less than one week short - does this mean I will pay 1/52 of the yearly £740ish cost?


Thanks

intalex

tigerspill wrote: »

I assume these are gross earnings?

Yes, correct

tigerspill wrote: »

And in May I had a redundancy payment (much was taxable and included NI payment as part go PILON). So in effect I earned over the ULL.

Does the portion of May gross earnings that attracted an NI deduction exceed UEL? Salary, PILON, Leftover holiday pay would but any statutory and/or ex-gratia payment doesn't attract an NI deduction (only has PAYE deduction), and I'm not sure this can be counted for determining qualifying year. Maybe someone else can confirm this.

tigerspill wrote: »

So I think this means I am just £27 short for this tax year. Is this correct?

I think you are right, though the HMRC NI Advisor I spoke to suggested that 1 month's deduction can be enough depending on earnings. I wasn't given details of how, but was told to wait until the end of the tax year before they would decide if I've already qualified or would be eligible for voluntary contributions. I'm fairly sure I'll be paying voluntary contributions at the end of the day.

tigerspill wrote: »

Do you know how this payment would be calculated given that I am so close to achieving the full year's contribution?

My understanding is that you have to pay voluntary NI for each week of UK unemployment in the tax year at Class 2 (£3/wk) or Class 3 (£15/wk) depending on personal circumstances. For me it's Class 2 for ~50 weeks in the tax year as I've moved out of the UK and am working overseas.

I appreciate this feels harsh for your circumstances, and I hope there's a "cheaper" way for you to get this tax year into a qualifying year. Hopefully someone else on here has ideas?

tigerspill

intalex wrote: »

Yes, correct

Does the portion of May gross earnings that attracted an NI deduction exceed UEL? Salary, PILON, Leftover holiday pay would but any statutory and/or ex-gratia payment doesn't attract an NI deduction (only has PAYE deduction), and I'm not sure this can be counted for determining qualifying year. Maybe someone else can confirm this.

I think you are right, though the HMRC NI Advisor I spoke to suggested that 1 month's deduction can be enough depending on earnings. I wasn't given details of how, but was told to wait until the end of the tax year before they would decide if I've already qualified or would be eligible for voluntary contributions. I'm fairly sure I'll be paying voluntary contributions at the end of the day.

My understanding is that you have to pay voluntary NI for each week of UK unemployment in the tax year at Class 2 (£3/wk) or Class 3 (£15/wk) depending on personal circumstances. For me it's Class 2 for ~50 weeks in the tax year as I've moved out of the UK and am working overseas.

I appreciate this feels harsh for your circumstances, and I hope there's a "cheaper" way for you to get this tax year into a qualifying year. Hopefully someone else on here has ideas?

Thank you. I really appreciate your detailed response.

I believe that I will definitely have exceeded the ULL with May earnings the attract NI contributions so that's seems OK.

I dont see mathematically how this can be achieved in a single month as the advisor suggested. But maybe I have misunderstood something.

If the voluntary contributions are based on weeks rather than amount, then that does seem very harsh as that would mean I need to make 44ish or more weeks at £15. Seems a bit unfair.

intalex

tigerspill wrote: »

Thank you. I really appreciate your detailed response.

I believe that I will definitely have exceeded the ULL with May earnings the attract NI contributions so that's seems OK.

I dont see mathematically how this can be achieved in a single month as the advisor suggested. But maybe I have misunderstood something.

If the voluntary contributions are based on weeks rather than amount, then that does seem very harsh as that would mean I need to make 44ish or more weeks at £15. Seems a bit unfair.

Happy to help. I don't see how 1 month's deductions can suffice either, but if HMRC insist on waiting before accepting my voluntary contributions then who I am to complain?

Maybe someone has better ideas to compensate for your shortfall but I wonder if it could be solved with NI credits (somehow), or perhaps take some short term work (e.g. for a week) before the end of the tax year, etc

I sure do hope this thread helps others heading into job exits proactively manage the situation.

Suzzi59

I am so confused after reading this post and a subsequent telephone conversation this evening with HMRC they have told me that I need to work 52 weeks for a qualifying year

My works pension is payable in June but I was planning on working an extra month to gain a qualifying year which I am short for a full state pension.

I don’t know what to believe, has anyone tested this method recently ?

p00hsticks

Suzzi59 wrote: »

I am so confused after reading this post and a subsequent telephone conversation this evening with HMRC they have told me that I need to work 52 weeks for a qualifying year

My works pension is payable in June but I was planning on working an extra month to gain a qualifying year which I am short for a full state pension.

I don’t know what to believe, has anyone tested this method recently ?

You certainly don't need to work 52 weeks. I think when I quit my last job in 2016 I left at the end of either July or August and was creditted with a full year

Suzzi59

pOOhsticks, thank you for insight.

xylophone

See https://www.thisismoney.co.uk/money/pensions/article-7873583/How-qualifying-years-state-pension-worked-out.html

Suzzi59

Xylophone you have been most helpful I quoted this article to HMRC and they totally refused what was quoted in the article. I have no confidence in HMRC call centre.

Basically my gross monthly salary is £2141 I
Am I correct in assuming that I only need to work three months in the next financial year 20/21 to meet the requirements for a qualifying year or am I missing something. The article mentioned a primary threshold however I’m not sure if this applies to me?