Minimum salary required for state pension

RogerPensionGuy

Dazed_and_C0nfused said:

Why do you think it "causes an issue" 🤔

AIUI it's just that the amount above UEL isn't a factor for NI purposes.

Could you clarify what issue you think there is?

@Neds explanation seemed pretty good to me 😀

Why does Ned mention that none of the 3 X 3K PM gross pay amounts goes above the UEL?

I understand why 3 X £2,150 = £6,450 and the NI year is captured achieved.

But cannot understand why any PM gross pay above the UEL could cause an issue. 

Can a person earn 6K for 2 months, so 12K gross and get the NI year.

I'm looking for the most efficient hours I need to work to capture a years NI.

As previous, cheers Roger.

Dazed_and_C0nfused

Why does Ned mention that none of the 3 X 3K PM gross pay amounts goes above the UEL?

I had taken that as making it clear to that all of the £3k would be a factor (as none had gone above the UEL).



But cannot understand why any PM gross pay above the UEL could cause an issue. 

You seem to be the only person who thinks it could "cause an issue".  What issue do you think it causes?



Can a person earn 6K for 2 months, so 12K gross and get the NI year.

@Neds explanation covered this.

However, monthly earnings above the UEL do not count, so earning £6400 in 1 month would not give a full year.

Two months of earnings (2 x £3000 = £6000) would not in itself be enough and would leave them just short of the LEL (£6396) - the year would not count without some other contributions, either from additional earnings or from NI credits awarded, for example, through claiming benefits

Doctor_Who

But cannot understand why any PM gross pay above the UEL could cause an issue. 

It won't cause an issue, it just won't be counted towards a full NI year.

You can't get a full year from working 1 month (UEL £4189, required amount £6396) - ignoring NI credits.

You can get a full year from working 2 months - could be £3000 one month and £3400 the next month, but not £5000 (above the UEL) one month and £1400 the next, again ignoring NI credits.

zagfles

RogerPensionGuy said:

Ned said.

"In your example, having earnings of £9,000 split evenly over 3 months (3 x £3000) would qualify for the full year as they would have earnings over the LEL and those qualifying earnings have not have exceeded the UEL in any once month:

I obviously still cannot understand the most easy economical and time efficient way of achieving a 1 years NI credit. 

In the example above, I'm confused as to why not going above the UEL is relevant?

If in the example the person gets gross pay of 4K, 5K or 6K any or all of those three months, why is it a problem?

I understand NI is 12% between the LEL and the UEL and income below the LEL is no benefit and income over the UEL also no benefit trying to achieve a quick easy one years NI credit in a financial year.

I understand gross pay of £2,150 for 3 months is £6,450 and is about the LEL so happy days.

I just cannot understand why earning above the UEL in any or all months would cause an issue. 

Say a person is on a zero hours contract and can adjust hours to achieve any gross pay per month, what's the most efficient way to get that one years NI?

Is it that 12% collection rate needs to collect an X amount of pounds over a period. 

I've spent hours and hours reading a lot on line and still unfortunately cannot exactly understand the mechanics of how to achieve an easy NI years credit. 

Thanks in advance to anyone that can explain simply what I just cannot understand. 

Cheers Roger.

The most efficient way is to earn between the LEL and PT each pay period. Then you pay no NI but get a year's credit.

Earnings below the LEL do count but only if you earn at least the LEL in that pay period, otherwise they don't.

Earnings above the UEL don't count.

So if you get paid monthly:

Earn £532 that month, zero counts that month.

Earn £533 (LEL) that month, £533 counts

Earn £10,000 that month, £4189 counts (UEL)

Is the total of all income that counts over the tax year at least 52x weekly LEL, ie £6396 this year? Then it's a qualifying year.

So 2 months earning above UEL will get you a year, one month on it's own won't.

11 months at £500 plus one month at £5000 won't.  (and you'll pay £393 NI)

12 months at £540 will. (and you'll pay zero NI)

Note for company directors etc there are special rules so stop manipulation, but don't think these apply to normal employees using sal sac or choosing how/when to work.

RogerPensionGuy

"In your example, having earnings of £9,000 split evenly over 3 months (3 x £3000) would qualify for the full year as they would have earnings over the LEL and those qualifying earnings have not have exceeded the UEL in any once month"

Hi All posters and thanks.

I now finally finally understand that going above the UEL is not any issue whatsoever, because I read the above quote that if any monthly pay went above the UEL it would not be great.

So as another poster has shown, if a person can adjust pay by hours or rate of pay he can do it in two months as long as the total is £6,396 or above and none of the payments are below the LEL.

So example of two payslips of say 3.0K + 3.5K or 3.2K + 3.2K  achieves the required results. 

Doing the above looks like staying on for April and May has good value and is the most time efficient way.

Or with all the above in mind, a person can just pick two months a year to get paid employment as long as it complies with the above examples and maybe collect a few years NI credits. 

It's funny that if person A went back to employment for a full 12 months,  April to March, he gets 1 year NI credit and person B does say 2 months every year for four years, person B picks up 4 years NI credit. 

Or maybe a better example if popping back for a bit of employment, just do February to May and pick up 2 years NI credit is nice and efficient. 

Thanks All posters, much appreciated.

Cheers Roger.