National Insurance - "Year is not full"

DoctorStrange

How much does one need to pay in NIC to qualify for a full NI year?

I paid c£1500 in 19/20 but having checked my personal tax account it says I have to pay another c£250 to make it a full year which, I'm surprised at. 

p00hsticks

DoctorStrange said:

How much does one need to pay in NIC to qualify for a full NI year?

I paid c£1500 in 19/20 but having checked my personal tax account it says I have to pay another c£250 to make it a full year which, I'm surprised at. 

Since 1978 a qualifying year is one in which you have paid (or treated as having paid) contributions on earnings of at least 52 times the Lower Earnings Limit. For the year 2019-20 the lower earnings limit is £118/week so you would need to have been paying NICs on a salary of £6,136 at least.

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

chrisbur

Seems strange what are the figures on your P60  Should be four or more figures all together.

DoctorStrange

I don't have a P60 I'm afraid. I left employment in April 19 and that months pay included some bonuses,  so I paid a lot of tax/NI.

I didn't work again but I thought the amount I paid over the year would be enough.  Perhaps the fact its a single payment instead of many is an issue?

Would seem unfair if that's the case though

oldbikebloke

DoctorStrange said:

I don't have a P60 I'm afraid. I left employment in April 19 and that months pay included some bonuses,  so I paid a lot of tax/NI.

I didn't work again but I thought the amount I paid over the year would be enough.  Perhaps the fact its a single payment instead of many is an issue?

Would seem unfair if that's the case though

you'll have a P45 then, the figures on there will show your gross earnings for that tax year since you say you have no income since then. Either that figure is more than £6,136 or it isn't. if not you will not have paid enough NI to get a qualifying year, it is an all or nothing situation (ie. you do not get part years).

chrisbur

As always a better idea of what is happening comes from having full and precise details.  On the details we have so far it suggests to me that the payment made included quite a large amount that fell over the upper earnings limit and would have had NI deducted at the 2% rate.  It has always been my understanding that these earnings are not included in the earnings figure on which a qualifying year is based.  This would only leave the earnings up to the UEL which was £4167 as counting.

DoctorStrange

My earnings that April (and the year) were over £50k, all paid via PAYE with full NIC / IT deductions (which is why the yearly NI was £1500 from only one pay packet)

Why would it show as only partial then?

Dazed_and_C0nfused

Because you need more than £4,167 (one month's relevant NI earnings) to reach a "full year".  

If you had been paid the same money but spread over April and May you would have likely had a qualifying year.

Assuming that this isn't to gain the final few pence to £175.20 it is still a good use of £250. 

£5.00/week (pre tax) for potentially 30+ years is not something you could get elsewhere for £250 

DoctorStrange

OK, I think I get it now. 

Odd that one can earn £6k, pay no NI and receive a full year yet someone paying £1500 NI and £15k tax doesn't qualify but I guess no one said it had to make sense!

Thanks everyone 

chrisbur

DoctorStrange said:

OK, I think I get it now. 

Odd that one can earn £6k, pay no NI and receive a full year yet someone paying £1500 NI and £15k tax doesn't qualify but I guess no one said it had to make sense!

Thanks everyone 

Or to look at it from a different angle your full year costs £1500 plus £250 while someone who earned the same amount but worked all year to get it would have paid well over £5000 NI for their full year.

DoctorStrange

chrisbur said:

DoctorStrange said:

OK, I think I get it now. 

Odd that one can earn £6k, pay no NI and receive a full year yet someone paying £1500 NI and £15k tax doesn't qualify but I guess no one said it had to make sense!

Thanks everyone 

Or to look at it from a different angle your full year costs £1500 plus £250 while someone who earned the same amount but worked all year to get it would have paid well over £5000 NI for their full year.

Yeah OK,  fair point - thanks for the perspective!