NI Gaps

Huggy_Bear
Huggy_Bear Posts: 195
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edited 11 December 2019 at 10:29AM in Benefits & tax credits
Hi

I've been in F/T employment for 29 years and have made full NI contributions, but over the last 2 years I have worked p/t and my earnings are below the personal allowance so I'm not paying tax or NI

In the new year I'm going to be earning a bit more (still under personal allowance) and looking into making voluntary contributions. I do plan to return to F/T work in the next 12 months and hope to earn over any personal allowance. Should I just wait until then?

Many thanks

Comments

  • calcotti
    calcotti Posts: 15,696
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    edited 11 December 2019 at 11:01AM
    If you earn more than £118/week you are treated as having paid NI contributions even though you don’t actually pay any until you earn £166/week (current rates). These thresholds are completely different to the personal allowance threshold for income tax purposes.

    Under current rules you only need 35 years of contributions to qualify for a full state pension. If you only need 6 years of contributions to meet this target but have potentially 10 years in which to work, in my opinion, it isn’t worth paying voluntary contributions for full years.

    You can check your NI record by contacting HMRC https://www.gov.uk/check-national-insurance-record. I recommend doing this. You may find that you have some years that are almost complete in which case you can, if you choose, complete them for a small outlay rather than paying for full years.
    Information I post is for England unless otherwise stated. Some rules may be different in other parts of UK.
  • calcotti wrote: »
    If you earn more than £118/week you are treated as having paid NI contributions even though you don’t actually pay any until you earn £166/week (current rates). These thresholds are completely different to the personal allowance threshold for income tax purposes.

    Under current rules you only need 35 years of contributions to qualify for a full state pension. If you only need 6 years of contributions to meet this target but have potentially 10 years in which to work, in my opinion, it isn’t worth paying voluntary contributions for full years.

    You can check your NI record by contacting HMRC https://www.gov.uk/check-national-insurance-record. I recommend doing this. You may find that you have some years that are almost complete in which case you can, if you choose, complete them for a small outlay rather than paying for full years.


    Thank you this has helped a lot. I wasnt aware of the contributions without actually paying anything. So I will wait until I return to f/t.
    Many thanks :beer:
  • calcotti
    calcotti Posts: 15,696
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    Huggy_Bear wrote: »
    Thank you this has helped a lot. I wasnt aware of the contributions without actually paying anything. So I will wait until I return to f/t.
    Many thanks :beer:
    I would encourage you to check your NI record then you will know exactly where you currently stand.
    Information I post is for England unless otherwise stated. Some rules may be different in other parts of UK.
  • Mrs_Soup
    Mrs_Soup Posts: 1,154
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    calcotti wrote: »
    I would encourage you to check your NI record then you will know exactly where you currently stand.


    I agree with this. I checked my record as I had more than the usual number of years as a student and then a mix of F/T and P/T work so I was expecting it to look patchy. Turned out all was fine except for one year in which I was definitely employed full time and paying NI was listed as insufficient contributions. I contacted my old employer who confirmed there was a known issue with that year 2004/5 and they then sent off info to HMRC confirm it. My record is now correct but it wouldn't have been if I hadn't checked..
  • Checked mine as a result of this thread, expecting it to be largely empty as I've never been able to earn enough to hit the threshold for paying tax or NI and had a couple of previous periods of unemployment, but to my surprise there's only one incomplete year and thirteen full years!

    (Not sure I could have done anything about it if there was nothing there, but it's quite nice knowing that the state doesn't officially view me as a total scrounger ;))
  • Under current rules you only need 35 years of contributions to qualify for a full state pension

    Those rules don't apply to the op. Most people are under transitional rules where needing 35 years to get the full new State Pension would be pure coincidence.

    The op may not need any additional years. Or could need 10 more.

    They need to check their State Pension forecast on gov.uk to see what their own position is. It is important to read past the headline forecast of £168.80 and check what the current entitlement (normally to 05:04:2019) is and how many years are needed to reach £168.80.

    And no, whatever you have accrued to date will not be reduced by any COPE value shown.
  • calcotti
    calcotti Posts: 15,696
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    Those rules don't apply to the op. Most people are under transitional rules where needing 35 years to get the full new State Pension would be pure coincidence.

    The op may not need any additional years. Or could need 10 more.

    They need to check their State Pension forecast on gov.uk to see what their own position is.

    Thanks for picking that up. I had forgotten that some future pensioners may already have reached the maximum (or more) without having 35 years of contributions, or might need extra to reach the full amount. i assume this is going to take a long time to work through the system. Just another simple part of the benefits system!

    OP, information on how to get state pension forecast here https://www.gov.uk/check-state-pension
    Information I post is for England unless otherwise stated. Some rules may be different in other parts of UK.
  • A long time indeed :p
  • Those rules don't apply to the op. Most people are under transitional rules where needing 35 years to get the full new State Pension would be pure coincidence.

    The op may not need any additional years. Or could need 10 more.

    They need to check their State Pension forecast on gov.uk to see what their own position is. It is important to read past the headline forecast of £168.80 and check what the current entitlement (normally to 05:04:2019) is and how many years are needed to reach £168.80.

    And no, whatever you have accrued to date will not be reduced by any COPE value shown.


    Thank you and everyone else replyng - very useful. I've checked online and need another 8 years to get a full pension.
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