NI threshold query

MattMattMattUK

helatruralhome said:

But what about statutory sick pay as isn't that tied to the lower threshold?

No, the qualifications for SSP are below.

To qualify for Statutory Sick Pay (SSP) you must:

• be classed as an employee and have done some work for your employer
• earn an average of at least £120 per week
• have been ill or self-isolating for at least 4 days in a row (including non-working days)

helatruralhome said:

Many people fall through the benefits loopholes so don't get credits or the earnings to pay for voluntary contributions so this could have a serious impact.

It could have an impact on some people, it will not impact most people. The reality however is that having a full NI record or not does not make that much difference any more, pension credit tops up to the same level as the New State Pension etc. so there will not be a huge issue with this. 

MSE_Helen_K

MSE_Helen_K said:

Hi all - we've put this question to HMT and we'll update this story here when we know more: 

https://www.moneysavingexpert.com/news/2022/03/spring-statement-2022-national-insurance-rise-tax-cut-/

Thanks,
MSE Helen 

Hi there, we've now added this into our specific story on the NICs shake-up, which you can read here: https://www.moneysavingexpert.com/news/2022/03/spring-statement-2022-national-insurance-rise-tax-cut-/

To summarise [EDIT this has been updated by me on 24 March to make it clearer]: 

How the shake-up affects state pension payments and benefits entitlement

Paying national insurance builds up your entitlement to certain benefits, such as the state pension. If you don't earn enough to pay national insurance, however, you can still get credits towards the state pension if you earn over a certain amount. (You can also get credits if you're not working, for example, if you're a carer or you're on certain benefits.) It works differently depending on whether you're an employee or self-employed: 
For employees, there's no change to this 'lower earnings limit', which is the point at which people gain a national insurance credit. From 6 April 2022, employees earning above £6,396 will qualify for a credit and they'll pay national insurance at 13.25% on earnings from £9,880. Then from 6 July, employees earning from £6,396 will continue to qualify for a credit while national insurance at 13.25% will be due on earnings from £12,570. 

For the self-employed it's different. Currently, those earning between £6,515 and £9,568 (between the 'small-profits threshold' and the 'lower profits limit') can gain entitlement to credits from the small-profits threshold. National insurance is due at a flat rate of £3.05 a week from £6,515, while any earnings above £9,568 are also subject to 9% national insurance.

From 6 April 2022, the weekly flat-rate contribution is being scrapped for those earning between the small profits threshold and the lower profits limit - though you'll still earn credits from the increased small-profits threshold of £6,725. Instead the weekly flat-rate contribution, which will rise to £3.15, will be due from the increased lower profits limit of £11,908. National insurance at an increased rate of 10.25% will also be due from this point.

Why don't self-employed people have a £12,570 threshold for national insurance like employees? Well, they are benefiting from a higher threshold from April 2022, three months earlier than employees. So the Government has recalculated the lower profits limit to reflect that.

molerat

From the horse's mouth here https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1062566/Draft_legislation_National_Insurance_Contributions__Increase_of_Thresholds__Bill.pdf

The draft legislation, with respect to the employed, simply replaces the PT, and only the PT, amounts with new.