Can someone explain the national insurance rise please?

[furrytoebean]

I've just read that Borris is raising the threshold to paying national insurance.
Will this not just mean more people don't pay it and therefore more people will have gaps in their National insurance and be locked out of the state pension?
So it seems like a good thing for poor people but will actually hurt them in the long run.
I know you can pay voluntary contributions but I don't think it's very clear how to do this and lots of people are just going to think it's a tax break with no consequences and this is only for pensions not any other benefit.
Am I missing something? Is there going to an expansion on the credit system?

I would have assumed that people below the threshold would have their contribution made from general taxation, and thus still receive their NI credit? Isn't that what happens if you're on benefits or maternity leave etc?

Im sorry but I'm not sure I follow what you mean.

At the minute if you earn less than the threshold, unless you apply for a voluntary contribution, are eligible for a credit or are on another benefit then you get an incomplete year.

As far as I'm aware you have to earn over the threshold every week for the whole year to qualify for a complete year so people on 0 hour contracts or on unreliable jobs could easily fall under when they raise it.

If you earn less than the threshold...then yes, surely you get a credit, because you'd be eligible for some form of benefit or income support/tax credit etc?
Which people are getting incomplete NI years?

www.gov.uk/national-insurance-credits

www.gov.uk/national-insurance-credits/eligibility

There are 2 thresholds. There's a lower threshold where you don't pay NIC but get credits anyway, and then a higher threshold where you pay NICs. As long as the lower threshold continues to rise only by inflation as previously, all will be fine for the lower earners earning between the lower and higher threshold - they'll still get their credits towards state benefits.

I had wondered the same OP.
I am only just over the threshold at the moment and i dont get any benefits to get NI stamps in other ways as my partner earns enough so we dont need benefits.
I thought this could seem great but actually might mean i dont qualify for my state pension. I will have to see how it works out.

I have a couple of incomplete years from when I had a job where I worked sporadic hours, from when I was a student and a year where I changed jobs and had a gap.
I wasn't eligible for working tax credits because I lived with a partner.

I'm actually fine because I went back and paid to fill in my gaps, but I do think there'll be people who may not know they have gaps in the first place.

Exactly grass
Lots of people earning below the threshold won't be eligible because they live with a partner but then if they ever split up they'll have holes, or even if they don't only one of them will be eligible.

I think you have to actively apply for the careers credits too so how many women are taking time off to look after relatives unaware it might affect their pension.

I have been a SAHM for years, but checked my record recently and have 36 years, so I must have picked up credits for claiming child benefit. I did however lose some pension value due to contracting out. So, you win some, you lose some!

The incomplete years are where you've had gaps and not been claiming a benefit that automatically credits your NI.

People earning below the threshold will be credited. It's a good thing

Ive incomplete years while at uni. I didnt realise until way past the time i could do something about it.

Its an even better thing for company directors paying their family members from their corporations so that even more can be hidden from paying any tax or ni

Pretty sure SAHM can get a maximum of 10 years credits if looking after a minor with no earnings.

As another said, it's the Lower Earnings threshold that matters for pension credit, not the Primary Threshold (when you actually start paying NI).

Always check your personal tax account online to see what your complete years are. You'll need an HMRC gateway account but it's worth setting up to see all benefits, tax payments, pension record etc.

I think you will find that people on JSA get it paid and employees is paid by their employer as well. The people who loose out are people who either don’t work or are self employed.

I opted out all those years ago but not sure how it affects things in real terms, I've since paid a ton of NI so I'm hoping it evens out somehow.

If you get child benefit do you not get NI credit?

Yes if you've got a child under 12. www.gov.uk/child-benefit/what-youll-get

People earning below the threshold will be credited. It's a good thing

I'm not sure how this is true. Some people below the threshold are credited, not everyone. You have to either be a carer or receiving benefits.

I would check lady Because it's not done by how much you pay but by how many years you've paid.

It's quite easy to check.

I have incomplete years from when I was a student and only working part time. I didnt make them up because even without them I will have worked more than enough years to qualify. However I do think people need to be aware of this as like pp said bot everyone earning below the threshold has it made up from benefits

The people who loose out are people who either don’t work or are self employed.

Or who work but only part time and don't claim benefits.
Or work but have two jobs (as the threshold is per job).

@furrytoebean it's not per job, it's per earnings. If you have a second job you're supposed to fill out a p46 when you start, which allocates a different tax code and splits the tax/ni across all income.

This is awful, as a lot of people will only be marginally better off, but unless they are receiving an eligible benefit, won't be receiving pension credits. Class 3 NI can be paid voluntarily, but at £14.10 per week will be difficult for a lot of people to manage.

Personally I think this is the first step in scrapping the NHS and state pension

sosick

Are you sure that applies to national insurance and not just income tax?

The information I can find is saying the limit is per job.

This is what Low Incomes Tax Reform Group Say

As well as tax, you might have to pay some National Insurance contributions (NIC) on income from another job. However National Insurance operates in a different way from income tax. With tax there is a single tax-free amount available per person per tax year. For National Insurance there is a new limit for each job so long as it is with a different employer. The limit is £166 per week (2019/20).
Example: Sandra has two jobs with different employers. In her main job she earns £195 per week. In her second job she earns £55 per week. In the first job she will pay £3.48 per week in National Insurance – 12% on £195 minus £166. In the second job she will pay no National Insurance as her earnings in that job are less than £166 in the week. The fact she is working two jobs is not taken into consideration for NIC like it is for tax. Her NIC liabilities for her two jobs are calculated totally independently from each other and are not compared to an overall annual amount, like for tax.
If you earn above the Lower Earnings Limit in any one job (£118 per week for 2019/20), and below the NIC threshold of £166 per week, you are credited with NIC, even though you do not have to actually pay NIC. These credits count towards your contributions record (for state pension, and other contributions based benefits).
If you do not earn at least the Lower Earnings Limit in any one job (£118 in 2019/20), you will not get any NIC credits. If this is the case and you do not get credits for any other reason (e.g. because you are claiming child benefit) you may want to consider making Class 3 voluntary NIC payments to help protect your contributions record.
You can find out more about NIC credits and making voluntary contributions on our website:
www.litrg.org.uk/tax-guides/tax-basics/what-national-insurance

taxaid.org.uk/guides/information/an-introduction-to-income-tax-national-insurance-and-tax-credits/national-insurance/national-insurance-for-employees-and-employers/national-insurance-with-more-than-one-job

Personally I think this is the first step in scrapping the NHS and state pension

I agree.

This is awful, as a lot of people will only be marginally better off, but unless they are receiving an eligible benefit, won't be receiving pension credits. Class 3 NI can be paid voluntarily, but at £14.10 per week will be difficult for a lot of people to manage
I think you are right. Of course it should be no surprise to anyone that Boris Johnson is not about helping people on a low income. Helping wealthy tax evaders yes.