NIC qualifying rule

My wife had two part-time jobs for the first six months of this tax year, and then gave them both up to go on a full-time training course. The DWP has still not decided whether they are going to "pay her stamp" for the latter half of the year, and if they eventually refuse to do so we want to ensure that her NIC record so far is sufficient to qualify her for the whole year. Is there an easy way to work this out from her payslips and P45s?

Matti

Reply to
Matti Lamprhey
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Payslips yes, P45 no.

--From NP46: A qualifying year for the basic State Pension is a tax year in which you have received (or are treated as having received) qualifying earnings of at least 52 times the Lower Earnings Limit for that year. What counts as qualifying earnings is given below.

--continues Earnings on which full rate Class 1 contributions have been paid or are treated as having been paid count as qualifying earnings.

--ends

I take that to mean that if her total earnings during the tax year, not counting money earned during weeks in which earnings were less than £79, add up to at least £4108, then this year will qualify. If the total falls short, she will have to buy Class 3 weeks at £7.15 each, each counting for £79 towards the total.

So look at each week's payslip's gross pay. If it's £79 or more, add it to your running total, otherwise disregard it. Make sure the total is at least £4108.

Didn't you ask something like this before? ISTR it had to do with an underpayment in one week, "corrected" by an overpayment in another. The simple correction may not be enough to properly compensate her for the error, if the underpaid week becomes a "less than £79" week. In particular, if the underpayment is small, and causes her to dip only slightly below £79, then she would lose almost £79 worth of qualifying earnings, less the size of the balancing overpayment. But it's not an issue if she can meet the £4108 QE target.

Reply to
Ronald Raygun

Thanks, Ronald -- that confirms what I thought, and I'll check now to make sure. I was worried that, if she was, say, 150 short, and we didn't discover it within the tax year then we'd have to buy a whole year's worth of Class 3 weeks instead of just two!

Quite right. I didn't mention that here because it's not related to the current problem really. We did eventually get a proper correction out of her #2 employer but I still don't think they understood why it was necessary! Thanks for your help again.

Matti

Reply to
Matti Lamprhey

But how does having 2 jobs affect this? It's not clear from NP46. AIUI NI is assessed independantly for each job, so she could earn 91 pw in each job and pay no NI. But if she earned 78 pw in each job (ie 156 pw total) would those earnings count?

Reply to
Andy Pandy

Not sure, but is she getting child benefit? If so she'll get HRP so it *may* not be necessary to worry about getting her stamp paid. Although HRP is not quite as good as getting her stamp paid, since it doesn't make a qualifying year but reduces the number of qualifying years she needs. See NP46 (search the dwp site for the latest issue).

Also if she's now a full time student she should be exempt from council tax, so you should get a 25% discount (assuming no other adults live with you).

Reply to
Andy Pandy

I think the answer is No to that last question. I'm assuming that the NICO take the annual summaries as laid out on the P60s for all employments during the year, irrespective of whether they were sequential or simultaneous or overlapping, and add the qualifying earnings together. On that basis it's not possible to create a qualifying pay period from multiple simultaneous non-qualifying pay periods.

But I would be interested to know if this is NOT how it works!

Matti

Reply to
Matti Lamprhey

In that case, the answer to the last question would be yes.

According to my interpretation of the NP46 extract I quoted, there is no such thing as a qualifying pay *period*, there is only qualifying *pay*. So if you earn £78 in one week, it counts for nothing. If you earn £79, it counts as £79. If NI is assessed separately per employment, then if the jobs are concurrent, and you earn £78 in each, nothing counts, but if you earn £79 in each, then you get credited with £156 of QE.

You didn't make it clear, but I assumed you meant your wife had two sequential, not concurrent, jobs, and if that is the case, this particular question doesn't really arise.

Reply to
Ronald Raygun

NIC payments are related to "Earners" in an "Earnings Period", as prescibed by SSCBA 1992.

Reply to
Doug Ramage

No -- those two 78 earnings would be non-qualifying and so would NOT count. We agree on that, so I don't see how you can get a "yes" from this?

I was using "non-qualifying pay period" to mean a pay period when less than 79 (assuming it's a week) is earned.

The two jobs were completely concurrent, in fact -- they each lasted from April to October.

Matti

Reply to
Matti Lamprhey

??? Do I need to understand what you just said, Doug?

Matti

Reply to
Matti Lamprhey

Not really, Matti. :)

It was just a response to RR's post about "Pay" rather than "Period".

IMO, you are unlikely to succeed in aggregating two (or more) unassociated employers. Most people want to do the reverse in order pay no NI - although they are not aware of the LEL loophole.

Reply to
Doug Ramage

I think I understand that, anyway. The whole NIC thing is now ludicrous; it occurs to me that it's possible to pay two employees, one a director and the other not, identically throughout a tax year, and for the year to be qualifying for the director when it's not for the non-director!

Matti

Reply to
Matti Lamprhey

My mistake. I had associated the wrong bit of text with the question. Sorry.

Reply to
Ronald Raygun

Pedantry is all very well, but in this instance it appears to be gratuitous. I was using "pay" as a convenient abbreviation for "earnings", intending it to be completely synonymous. Did I thereby unwittingly introduce scope for ambiguity? It would be irregular if pay and earnings were different.

Matti's "create a ... period" sounded like period-counting, and I just wanted to re-emphasise that it's not qualifying periods but qualifying sums of money which are counted.

We're all agreed, then.

Reply to
Ronald Raygun

I was not taking issue with earnings/pay, but your disregarding of Earnings Periods in your first post.

You seemed to be saying (unless I have mis-understood) that an individual merely needs to have earnings of 4108 in a tax year for it to qualify? That is not correct. For example, if someone (not being a director) earned

4108 (or more) in 1 week only, that year would not count, as there would only be 1 qualifying week and the required 52 weeks. Or have I missed something?
Reply to
Doug Ramage

Disregarding weeks in which earnings are below the LEL. If I understand correctly.

Ronald's quote of NP46 would seem to indicate such a year *would* be a qualifying year, as the person would have received qualifying earnings of at least 52 times the LEL in that tax year.

Reply to
Andy Pandy

Oh -- now I'm confused again. Can you explain exactly what the qualification rules are? I'm assuming that NICO determine it purely using the P60 summary boxes, so how does this work? (And how do they know anything about the number of qualifying pay periods from those boxes?)

Matti

Reply to
Matti Lamprhey

No, they have to be *qualifying* earnings of £4108 in the tax year. The implication which I infer is that for any week in which not less than the LEL is earned, the whole earnings go into the pot, and if less than LEL is earned, then nothing goes in the pot. The year qualifies if the pot is big enough. The weeks don't get counted.

Isn't it? But that's what NP46 says.

My understanding of NP46 is that a year qualifies if the employee has received qualifying earnings of at least 52 times the LEL, without there being a requirement that those earnings be spread over the whole 52 weeks.

Unless NP46 is being economical with the truth, then earnings of £4108 in just one week *will* make the whole year qualify.

Reply to
Ronald Raygun

"Ronald Raygun" wrote

That would be most useful for people **paid monthly**.

If every single week in the year has to have at least 79 earnings, and someone paid monthly is paid one week - then not for 3 or 4 weeks - then paid the next week, but then not for another 3 or 4 weeks ... then no-one being paid monthly would ever qualify!! :-((

Reply to
Tim

Can someone have a go at answering this? I'd still like to know whether Doug is sticking to his answer above. If Doug is right, my wife will have a lot of weeks to buy...

Matti

Reply to
Matti Lamprhey

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