Voluntary NI Contributions

hoggypne75

With the recent increase in the threshold for paying National insurance it means that low paid workers now face a bill of over £800 to pay for a year of contributions when previously it was deducted at source from their pay costing around £10-15 per month. How is this helping out low paid workers?

JGB1955

The Lower Earnings Threshold hasn't increased so as long as you earn £6,396 (£123 per week) you still get all the benefits of Class 1 payments without having to pay for them.... or are you referring to a different contribution?

p00hsticks

hoggypne75 said:

With the recent increase in the threshold for paying National insurance it means that low paid workers now face a bill of over £800 to pay for a year of contributions when previously it was deducted at source from their pay costing around £10-15 per month. How is this helping out low paid workers?

As JGB1955 has pointed out, I suspect you've misunderstood how the system works. Low paid workers will get the same NI credits as they always have done, (because that is determined by the Lower Earnings Limit, which is unchanged) but the increase in the Primary Threshold means that fewer will actualy pay any NI.

Low paid workers should be better off ( or at least no worse off) as a result.  

Dazed_and_C0nfused

hoggypne75 said:

With the recent increase in the threshold for paying National insurance it means that low paid workers now face a bill of over £800 to pay for a year of contributions when previously it was deducted at source from their pay costing around £10-15 per month. How is this helping out low paid workers?

I think you need to take a closer look at the changes as you've completely misunderstood.

hoggypne75

Thanks for the above replies. My information was given to me by the Government's Futures Pensions helpline. If you are saying that although i pay nothing towards National Insurance due to the change in the threshold but my employer still contributes on my behalf then that is completely different? Would be grateful if anyone could confirm this. I was told to wait until next April and contact HMRC to find out how much i would need to pay to make 2022-2023 a full contribution year!!!!

Dazed_and_C0nfused

Whether your employer contributes is dependent on the level of your earnings.

You need to be earning above the LEL is the bit that is important for State Pension purposes.

The attached link might be useful.  It's about people going abroad but the same principles apply.

https://www.litrg.org.uk/tax-guides/students/going-abroad/national-insurance#:~:text=Someone who has not worked,contributions and therefore pay less.

hoggypne75

Looking at the Government website it appears that I am above the Lower Earnings Limit which indicates i get the benefits of National insurance (state pension qualifying credits) without actually paying any. I am over the Secondary Limit which means my employer pays something on my behalf. Can't get through to the NI helpline so thank goodness for the help given on this Forum. Cheers.

Linton

hoggypne75 said:

Thanks for the above replies. My information was given to me by the Government's Futures Pensions helpline. If you are saying that although i pay nothing towards National Insurance due to the change in the threshold but my employer still contributes on my behalf then that is completely different? Would be grateful if anyone could confirm this. I was told to wait until next April and contact HMRC to find out how much i would need to pay to make 2022-2023 a full contribution year!!!!

Whilst you are earning more than £123/week the £800 voluntary NI rate is irrelevent.  

If you are paying voluntary NI to cover the weeks when you were not earning sufficient the £800year (£15.40/week) is still an extremely good deal since you get the money back in extra State Pension in about 3 years. 

The FP helpline told you to contact HMRC after next April because no-one knows now whether you will be earning sufficient money during 2022/23.