Ni Credits

calcotti

Old discussion on that topic here
https://forums.moneysavingexpert.com/discussion/5586387/working-part-year-and-ni-years/p1

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

sammyjammy

Snookie12cat said:

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.

Not true, its awarded on a weekly or a monthly basis as to which you get paid, you get a credit for every period you reach the LEL so you may get some credits but not all for a year if your wage goes up and down.

calcotti

sammyjammy said:

Snookie12cat said:

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.

Not true, its awarded on a weekly or a monthly basis as to which you get paid, you get a credit for every period you reach the LEL so you may get some credits but not all for a year if your wage goes up and down.

But you can still reach a full year without getting credited in every week if you have sufficient earnings between the LEL and UEL on a weekly/monthly basis. Perhaps it's simplest to quote from the second link in my previous post (note the numbers are out of date but the principle is unchanged).

A crucial number in the system is the ‘lower earnings limit’. This is currently £6,136 per year, or £512 per month (if you are paid monthly) or £118 per week (if you are paid weekly). This is the earnings level at which your earnings start to count towards building up a ‘qualifying year’ (of which more below).

A second important number is the ‘primary threshold’ which is currently £8,632 per year, with corresponding monthly and weekly rates.

In terms of how much NICs you pay and what you get for them, there are three broad groups:
- Those who earn above the primary threshold in any given week or month: they have to pay NICs and these earnings count towards making the year a ‘qualifying year’;
- Those who earn between the lower earnings limit and the primary threshold: this group is ‘credited’ with NI contributions towards their NI record but do not have to actually pay NICs;
- Those who earn under the lower earnings limit – this group pays no NICs and gets no NI credits.

For a year of your working life to be a ‘qualifying year’ towards your state pension, you have to have paid (or been credited) with NI contributions on earnings equal to 52 times the weekly lower earnings limit.

As noted above, periods when you are earning below the LEL do not count towards this target.

But the good news is that weeks (or months) when you are earning more than the lower earnings limit help to make up for weeks (or months) when you were not earning (or earning below the LEL).

To give a simple example, suppose that you have a year in which you do no paid work for 26 weeks and then you do 26 weeks at an earnings level of £236 – double the lower earnings limit. For the year as a whole, you have qualifying earnings of 52 times the LEL and this is therefore a qualifying year.
In the example given in the question, we can ignore the periods when the individual earned a token amount, and focus on the five months where pay was £2,000. In each of those months, the pay was above the monthly LEL and therefore the full amount counts towards the annual target. As five lots of £2,000 totals £10,000 for the year, and this is in excess of 52 times the weekly LEL (£6,136) this would count as a qualifying year.

molerat

calcotti said:

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

The draft legislation published, as far as the employed are concerned, only changes the PT.  No other thresholds are affected.

edited to change typo

calcotti

molerat said:

calcotti said:

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

The draft legislation published, as far as the employed are concerned, only changes the LEL.  No other thresholds are affected.

Which draft legislation are you referring to? Regulations changing the LEL from £120 and £123 have been made. https://www.legislation.gov.uk/uksi/2022/232/contents/made
The announcements yesterday will change the primary threshold not the LEL.

molerat

calcotti said:

molerat said:

calcotti said:

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

The draft legislation published, as far as the employed are concerned, only changes the LEL.  No other thresholds are affected.

Which draft legislation are you referring to? Regulations changing the LEL from £120 and £123 have been made. https://www.legislation.gov.uk/uksi/2022/232/contents/made
The announcements yesterday will change the primary threshold not the LEL.

Sorry, brain fog typo, now edited to read PT.

singhini

Good thread which I am finding fascinating yet a little confusing.
I've just gone to a website called TaxAid and it's suggesting the LEL is currently  £123 per week which on 6th July will rise to £242 
This in my head suggests that someone earning let's say £125 a week would currently qualify for NI credits from the government but come July they will no longer get NI credit entitlement because the LEL have gone up (see point a and point e of these screenshot).

Therefore someone could theoretically get a pay rise in July to say £240 a week which means they still wouldn't be entitled to NI credits thus miss out on qualifying pension years and also loose other state benefits since their overall income has increased 

Dazed_and_C0nfused

I've just gone to a website called TaxAid and it's suggesting the LEL is currently £123 per week which on 6th July will rise to £242 

That isn't on any of the screenshots you've posted.

singhini

Well spotted, now it makes sense.
Thanks 

calcotti

singhini said:

Well spotted, now it makes sense.
Thanks 

To be fair, it is confusing that they have included a sentence about the change in the Primary Threshold under a heading for the LEL.