low salary - ni issues?

low salary - ni issues?

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I am a director and pay myself £5280 a year plus dividends. I am not paying any NI on that amount, just a small amount of tax. I was told by the NI office that as long as I earn over the personal allownace for the year I woudl be credited with a year's worth of NI contrbutions.

I have now heard from a friend, who operates the same system, that he has received a letter saying he has not enough contributions.

Can anyone shed any light on this? I am finding some of the people on helplines don't seem to understand my question.

E Hall

Replies (5)

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By StevieG
05th Nov 2007 14:26

nat ins contribs
You have no problem here because your salary is in excess of lower earnings limit and provided p14 and year end P35 are submitted at end of tax year you will be receive crdits equivelent to someone on £13k salary!!!

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By Sherman Holter
06th Nov 2007 11:40

Commencement or Termination years ?
The situation you've outlined here may occur in either the year you commenced the directorship or the year you finish.

We have only experienced clients falling into this category where there was a gap of more than a week between the prior (or next) employment.

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By AnonymousUser
06th Nov 2007 15:14

P38A
Doesn't a P38A suffice instead of a P14 ?

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Euan's picture
By Euan MacLennan
06th Nov 2007 16:15

Must be a P14
The only piece of information that is relevant to the Revenue for crediting (nil rate) NI contributions for a tax year is a non-zero entry in box 1b (earnings between the Lower Earnings Limit and the Earnings Threshold) of the P14. The P38A contains no such information and is useless - as, to be pedantic, is the P60 which goes to the employee, not the Revenue.

But, as Hugh has pointed out, all this discussion about being credited with contributions is irrelevant because you will be paying real NI contributions on a director's salary of £5,280 in the current tax year, 2007/08.

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By User deleted
06th Nov 2007 14:03

P60 completion essential
To get the NIC credit for pension purposes a P60 must be completed each year with the P35.

I have heard of some "short cut" accountants (the sort who think everything only takes 5 minutes and probably charge accordingly undercutting the rest of us) not advising clients to go through the proper P35 / P60 procedure to gain the necessary NIC credit for pension purposes.

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