Ni Credits

Snookie12cat

With the announced rise in NI threshold, this means I will no longer be paying any NI.
How does this work for my NI credits? Will I still get them as I am working, or do I no longer qualify for the credits as I do not pay anything?

calcotti

If you are employed, provided you earn more than £123/week you will treated as having paid Class 1 NI contributions even though you pay nothing.

If you are self employed and are not required to pay Class 2 contributions you can choose to pay voluntary Class 2 contributions to maintain your NI record.

NedS

The Government announcement relates to the Primary Threshold (see below), the level you start paying NI. However, NI credits are awarded for earnings above the Lower Earnings Limit (LEL) and the Government did not give any detail as to how (or if) that may rise next tax year, after April:

https://www.gov.uk/government/publications/rates-and-allowances-national-insurance-contributions/rates-and-allowances-national-insurance-contributions

calcotti

NedS said:

.. the Government did not give any detail as to how (or if) that may rise next tax year, after April

The Lower Earnings Limit was previously announced to rise to £123 in April.
https://www.gov.uk/guidance/rates-and-thresholds-for-employers-2022-to-2023#class-1-national-insurance-thresholds

Dazed_and_C0nfused

I don't think it's certain that the LEL won't change, there is a statement on gov.uk now,

From April 2022 the rate of National Insurance contributions you pay will change for one year. The amount you contribute will increase by 1.25 percentage points which will be spent on the NHS and social care across the UK.

On 23 March 2022 the UK Government announced at Spring Statement 2022 an increase in National Insurance thresholds for the 2022 to 2023 tax year.

This means employees and self-employed people will pay NICs contributions on less of their income or profits. Updated rates and thresholds will be published before these changes take effect.

calcotti

Dazed_and_C0nfused said:

I don't think it's certain that the LEL won't change, there is a statement on gov.uk now,

From April 2022 the rate of National Insurance contributions you pay will change for one year. The amount you contribute will increase by 1.25 percentage points which will be spent on the NHS and social care across the UK.

On 23 March 2022 the UK Government announced at Spring Statement 2022 an increase in National Insurance thresholds for the 2022 to 2023 tax year.

This means employees and self-employed people will pay NICs contributions on less of their income or profits. Updated rates and thresholds will be published before these changes take effect.

But that has nothing to do with the LEL. The importance of the LEL is that it determines when people are treated as having paid NI even though they haven’t, this in turn sets the earnings requirement to qualify for SSP and to maintain an NI record for contribution based benefits.

Employees earning between the LEL and the primary threshold pay no NI. They only start to pay when they earn over the primary threshold and it is that which is being raised as a result of today’s announcement.

Employers don’t pay NI until earnings reach the secondary threshold which was already slightly below the primary threshold. I can’t see anything about changes to that so the secondary threshold will now be significantly less than the primary threshold.

NedS

My guess is that they wouldn't intentionally leave a cohort of workers effectively trapped between working/earning too much to qualify for NI credits through the benefit system (JSA or UC) yet not earning enough to meet the LEL else these people could effectively work their whole lives and never gain a qualifying year.

kaMelo

I agree, to increase the LEL at anything more than inflation carries political damage to the Government as well as potential long term financial harm to those who may be affected.
Also, going forward, the rules around the new state pension were written in such a way that almost everyone will qualify with lower earners better off as a result, (albeit at the expense of higher earners who would be worse off). 
As @Neds mentioned, creating a group of people who earn to much for benefits but not enough for NI credits, would be both unfair and go back on the original ideas behind the new state pension..

calcotti

No one is suggesting raising the LEL beyond the rise from £120 to £123 previously announced.

Merlin139

Do you have to be earning the minimum each week or each month to get Nat Ins credits or can it be made up of months where you earn lots and months where you earn very little. Someone who is employed part time but does more hours during the summer and very few during the winter?

Snookie12cat

Merlin139 said:

Do you have to be earning the minimum each week or each month to get Nat Ins credits or can it be made up of months where you earn lots and months where you earn very little. Someone who is employed part time but does more hours during the summer and very few during the winter?

It's a qualifying year so I imagine they look at your P60 and ensure the amount works out over the year.