National insurance

onthego

I'm working part-time around studies, earning approx. £7.5K pa on PAYE.
I get paid weekly and work irregularly depending on commitments, so some weeks end up paying NI, mostly don't. When I do pay NI, it's often because my employer has paid me late for some shifts so I get nothing one week and double the next. I've paid about £50 NI in 3 months so far, whereas if I was paid monthly I think I'd have paid nothing.
I realised that if I ask to change to monthly pay, I can probably save myself paying the NI. Which is not a huge amount, but noticable when you're broke. If I go to monthly pay, odds are it will even out and not be over the monthly limit, or at least not often.

I've had a bit of a google and think this shouldn't affect my qualifying years for pension if I go to monthly pay and thus hopefully stop paying NI. Am I right to think the qualifying years are based on annual salary, so if I earn over the lower limit for a qualifying year but under the lower limit for paying NI in the year, I would get a qualifying year anyway, even if I didn't earn enough to pay any NI in any month? I don't have to earn enough to pay NI each month or week to get the qualifying year, as long as I earn a certain amount over the year?

It probably doesn't really matter anyway as I imagine I will be working until I die and pensions will dry up long before I would have a chance of sniffing one. But I don't want to shoot myself in the foot unnecessarily!
Thank you!

Brynsam

You get a qualifying year if you earn an average of over £162 a week from one employer.

greenglide

You get a qualifying year if you earn an average of over £162 a week from one employer.

Not quite.


You get a qualifying year if your average wage is £116 per week (the lower earnings limit) or more.


Above £162 per week (the primary threshold) you actually pay NI contributions. As the OP has correctly calculated payment weekly (4 weekly would do as well) will generally avoid occasional NI payments but still get the qualifying year and seems a good idea.

onthego

Fab, thank you greenglide, that is really helpful to know. I will have to get myself switched to monthly!
Many thanks.

zagfles

You are right that monthly pay would probably result in you paying less NI, also it would likely give you a better chance of getting a qualifying year for state pension!

However if your employer has their payroll system set up for weekly pay they are unlikely to be able (or bothered) to switch you to monthly. If they can't, try to get them to process your shifts more promptly so your pay is more evenly spread.

If you want to know how NI works, this page has the thresholds:

https://www.gov.uk/guidance/rates-and-thresholds-for-employers-2018-to-2019#class-1-national-insurance-thresholds

Paying NI is based on your earnings in a pay period. If you earn above the PT in that period you pay 12% of [pay minus PT] (2% of anything above the UEL).

Getting NI credits is based on total NI'able earnings over the year. If that exceeds the annual LEL, then it's a qualifying year. But do not count any pay period where you earn below the LEL, or any pay above the UEL.

For instance: earn £100 per week for 30 weeks and £300 per week for 20 weeks - total £9,000, but not a qualifying year, because the £100 weeks don't count as below the LEL. Only £6000 counts, and that's below the annual LEL.

Earn £200 per week for 35 weeks and nothing the rest of the year - is a qualifying year, as total is £7000 and all weeks above the LEL.

Esox

I'm in a similar boat to the OP (i.e. intermittent pay). For 17/18, I had 28 out of 29 weeks worked above the LEL (£113). My annual gross pay for those 28 weeks was £5,362 (verses £5,876 NIC annual threshold).

When I spoke to HMRC, about any shortfall with regard to nSP, they said that if I post them a cheque for £71.25 (as Class 3 National Insurance Contributions) then that would take my 17/18 NICs to a qualifying nSP year.

£71.25 sounded an awfully low amount to me, so I didn't want to argue and duly sent off the cheque (with a carefully worded letter explaining what the cheque was for). I've had an acknowledgment for the receipt of the cheque but still waiting for my 17/18 NIC record to be updated.

additional info:

Apparently, I was five weeks short of a qualifying nSP year so the £71.25 equates to 5 x £14.25/week NIC Class 3 contributions

Makes no sense to me but wasn't going to argue

onthego

Zagfles, thanks for the detail. That is such a weird way of them doing it. It seems to really need modernising. There will be others like me who probably don't realise they are losing out from both angles...paying extra into a scheme they are not even qualifying for.
Going monthly (which my employer allows) definitely seems worth the cash flow hit to sort out the NI. It may be too late to save this year...I'll do some maths.
Thank you all for your helpful replies.

zagfles

onthego wrote: »

Zagfles, thanks for the detail. That is such a weird way of them doing it. It seems to really need modernising. There will be others like me who probably don't realise they are losing out from both angles...paying extra into a scheme they are not even qualifying for.

Yup. Still based on the old "stamp". About 6 years ago the govt did say they wanted to modernise it, basically merge the operation of NI with tax so it works on an annual year-to-date basis.

But it looks like it was kicked into the long grass as "too hard", not helped by misunderstanding from clueless journalists and social media warriors who claimed it would mean NI on pensions etc when the govt made it crystal clear that would not be the case, the scope would be unchanged, just the operation.

Going monthly (which my employer allows) definitely seems worth the cash flow hit to sort out the NI. It may be too late to save this year...I'll do some maths.

Thank you all for your helpful replies.

Yes depending on the precise amounts some people may be better off weekly, others monthly, but it sounds like in your case you'd be better off monthly.

billbolla

Martin
I have recently been granted Specified adult childcare credits by HMRC for 2011/12
My National Insurance record has also been updated stating I now have 48 contributing years ! However, my pension forecast has remained the same . I rang the Pension Forecast number and they state that I can't claim and National Insurance credits prior to 2016, as they changed the rules in 2016.
I can't find any information about this, HMRC don't seem to know this rule change as they accredited my Natuonal Insurance record for 2011/12
Can anyone help please
Bill C

p00hsticks

billbolla wrote: »

Martin
I have recently been granted Specified adult childcare credits by HMRC for 2011/12
My National Insurance record has also been updated stating I now have 48 contributing years ! However, my pension forecast has remained the same . I rang the Pension Forecast number and they state that I can't claim and National Insurance credits prior to 2016, as they changed the rules in 2016.
I can't find any information about this, HMRC don't seem to know this rule change as they accredited my Natuonal Insurance record for 2011/12
Can anyone help please
Bill C

What amount does your forecast say ?

When do you reach state retirement age ?

If you already have 48 years chances are you've already hit the maximum amount.

billbolla

thanks my forecast says £152 pw
I need to contribute another 2 years to reach max pension £162 pw