National Insurance

Robinhood

What is the impact of a break in National Insurance contributions?

I finished with my previous employer at the end of July and had August off before starting today (01st September) with my new employer.
Will the month break in NI contributions have and detrimental effect later on?
Should I buy stamps to fill in the break? If so, is it still possible to do this or have I left it too late?

All advised gratefully received. Thanks in advance.

p00hsticks

Whether it's significant depends on your individual circumstances. Depending on how much you earn, it's perfectly possible for the year to count as full when working out how much State Pension you will be entitled to later, even with a gap during the year. As far as I'm aware the only other impact of a gap in your record is that it could potentially affect your eligibility for new style JSA if you needed to claim it in the next couple of years.

You can check your state Pension forecast online here

https://www.gov.uk/check-state-pension

I'd suggest you wait until the 2021-22 record is available - usually in arounf July or August next year, to see if the gap means the year is not full.

If it turns out that you might be short of years to give you a full pension and the year does not count as full , then you have six years to make a voluntary contribution to top up the year to make it full, so there's no real urgency.

Robinhood

Thank you for the reply. Having worked all my life, 29 years and 11 months with my previous employer, I never gave any thought to having a months break until somebody recently mentioned it to me. I’ll have a look at pension forecast and it’s good to know I have 6 years to make a voluntary contribution.
Thanks.

chrisbur

To get a full year for national insurance you need to have been paid 12 times the lower earnings limit in the tax year if monthly paid.  So that is 12 time £520 or £6240.  All months when you earned at least £520 will count towards this for earnings up to a maximum of £4189  So if say you had a month when you earned £3120 that took you half way there.

Robinhood

Hi Chrisbur, so if I’ve understood correctly, so long as you pay the minimum required amount for a year it doesn’t matter if this was over say 6 months or a year. Is that right? Thanks

molerat

Robinhood said:

Hi Chrisbur, so if I’ve understood correctly, so long as you pay the minimum required amount for a year it doesn’t matter if this was over say 6 months or a year. Is that right? Thanks

Almost, you need to EARN the minimum amount.

kaMelo

Robinhood said:

Hi Chrisbur, so if I’ve understood correctly, so long as you pay the minimum required amount for a year it doesn’t matter if this was over say 6 months or a year. Is that right? Thanks

As above, to qualify as a full year you have to have annual earnings of (at least) to 52 times the weekly lower earnings limit which is currently £120 per week so, annual earnings of £6,240 or more would qualify as a full year for pension entitlement.

calcotti

kaMelo said:. so, annual earnings of £6,240 or more would qualify as a full year for pension entitlement.

Not necessarily - it depends how they are earned. If there are any weeks in which earnings are below £120 then the earnings in those weeks do not count towards NI.

kaMelo

calcotti said:

kaMelo said:. so, annual earnings of £6,240 or more would qualify as a full year for pension entitlement.

Not necessarily - it depends how they are earned. If there are any weeks in which earnings are below £120 then the earnings in those weeks do not count towards NI.

Regarding state pension entitlement only, (not any other benefits)  the frequency of earnings or payment of earnings doesn't matter, only the total annual earnings which if equal to or greater than the LEL then the year will be counted as a full qualifying year.
This rule is specifically in relation to state pension entitlement only..

Robinhood

Thanks all. From the comments received I believe I should be ok. Not really getting in to any discussion about it as it’s all well over my head 😂
Thank you

calcotti

kaMelo said:

calcotti said:

kaMelo said:. so, annual earnings of £6,240 or more would qualify as a full year for pension entitlement.

Not necessarily - it depends how they are earned. If there are any weeks in which earnings are below £120 then the earnings in those weeks do not count towards NI.

Regarding state pension entitlement only, (not any other benefits)  the frequency of earnings or payment of earnings doesn't matter, only the total annual earnings which if equal to or greater than the LEL then the year will be counted as a full qualifying year.
This rule is specifically in relation to state pension entitlement only..

I was not aware of that. Thanks for clarifying/explaining.