Income for National Insurance?

hamptons

A company I sometimes do work for offered me a big project last week starting straight away. I had no other income last tax year just finished, so paid no NI unless I make a voluntary contribution which would be over £700 I think.

I started on the project the last week in March so a few days bwfore tge end of the tax year but I have not been paid anything yet as we agreed an amount for the whole project. What is the minimum employment earnings to get enough NI for a qualifying year for the State Pension, and If the company agreed can I ask to be paid that amount for either March or April and count it as income for last tax year just finished? Or is it too late now to count any income towards NI for last tax year now the new one has started?

System

Too late for last year however you can make voluntary payments for any years you're short.

hamptons

So even if salary or earnings for March is paid at the end of the month then the income does not count for NI in the tax year unless I cash the cheque and the money is in my bank account before 5 April?

Dazed_and_confused

Is this work being done as an employee or are you doing it on a self employed basis?

hamptons

When I worked for them before I was on the "payroll" and they paid my NI and my PAYE and I think it will be the same now, so employee?

Dazed_and_confused

Well if they haven't paid you anything yet you have missed the boat for 2018:19.

Shame you didn't do a bit of self employed work (of any sort, not connected to this new job) last tax year as you could have paid voluntary class 2 National Insurance for c£150 rather than class 3 for £700+

hamptons

OK thank you.

On HMRC's site it says: "You pay National Insurance contributions when you work and are earning over a minimum amount (£166 a week in 2019 to 2020). If you earn between £118 and £166 a week (2019 to 2020) from one employer you may still be building up your National Insurance record."

So what is the minimum employment income per annum so that NI contributions count as a Qualifying Year for State Pension. Is it £8,632 (£166 x 52) or £6,136 (£118 x 52)?

Also what does it mean if you earn between £118 and £166 a week (2019 to 2020) from one employer you may still be building up your National Insurance record? If your emplyment income is in that range what is required to know you are getting Qualifying Years for State Pension?

Prism

If you earn more than £6136 this year it will count as a qualifying year. £8632 is when you and your employer start to pay national insurance contributions - typically 12% and 13.8%.

The reporting is done by the employer so HMRC know in which tax year to count the payments. For example, in April I will tell HMRC (as an employer) about salary payments I am due to make at the end of April, including any national insurance due (if any).

hamptons

Prism thank you for that.

So if I am paid £6136 or more but less than £8632 year it will count as a qualifying year but I thought NI had to be paid to makea Qualifying Year, how does that happen if neither me or the employer make NI contributions? You said that £8632 is when me and my employer start to pay NI contributions. Who pays the NI if I earn less than that but over £6136?

Prism

hamptons wrote: »

Prism thank you for that.

So if I am paid £6136 or more but less than £8632 year it will count as a qualifying year but I thought NI had to be paid to makea Qualifying Year, how does that happen if neither me or the employer make NI contributions? You said that £8632 is when me and my employer start to pay NI contributions. Who pays the NI if I earn less than that but over £6136?

Nobody pays it between those two amounts. The rate is 0%. However you still get a Qualifying year. Its no accident that many who run their own limited company pay themself exactly the Primary Threshold rate (£8632 this year) to get all the benefits of a qualifying year and yet pay no actual NI. More than this you begin to pay NI. Thats my salary for this year btw.

hamptons

Prism

Useful to know.I see why business owners pay themselves maximum. But if the company cannot afford to pay the maximum, I would still get a Qualifying Year if they can pay me at least the minimum £6136?