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Directors Salary to Qualify for Full State Pension

What is the minimum salary a director should pay themselves to qualify for full state pension

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Hi I was working on the basis that as long as a director is being paid salary above the Lower Earnings Threshold then full state Pension Credits would be earned. There now seems to be some doubt about this and I have read that this is not enough and that it should exceed the Primary Earnings Threshold. I have been paying a director above the LEL but below the PET since 2003. That director's National Insurance record shows most years as not having any contributions. How can this issue be resloved - especially in view of the number of years it goes back? Any help gratefully receive.  

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09th Apr 2019 10:32

What is the source of your doubts ?

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to lionofludesch
09th Apr 2019 11:18

An accountant who says its not sufficient and that you should pay just over the PET - also Gov.Uk says "may" be entitled to state benefits.

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to Mickey Jupp
09th Apr 2019 16:38

Mickey Jupp wrote:

An accountant who says its not sufficient and that you should pay just over the PET - also Gov.Uk says "may" be entitled to state benefits.

Who's the accountant? Maybe you should tell him to re-train?

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09th Apr 2019 10:39

This was always a fear of mine.
Many advocate (quite correctly I believe) that paying over the LEL is sufficient.
I have tended to advise paying just over the PET, particularly in the pre RTI days, but it has stuck with me.
The rationale being that if you paid SOME NIC (albeit only a few pounds in many cases) that this forced HMRC to actually process the figures. I didn't like the idea of some HMRC centre receiving a pile of manual P14s with no NIC actually showing and them not processing them correctly.

OP where have you read "that this is not enough".

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09th Apr 2019 10:42

It seems either a problem with the payroll submissions or with the NI office since it's earnings over the LEL that give you a qualifying year so, assuming everything was filed correctly, your director should have a full record.

You have been filing the payroll, haven't you? With all the correct details in place?

If so then I would suggest you gather your paperwork and fire it off to them to fix it.

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to Duggimon
09th Apr 2019 11:26

Yes everything has been filed. I cannot see anywhere on HMRC website that states that the minimum salary should above LEL to qualify for full State Pension, only to receive State Benefits. This seems to be the received wisdom but not certainly reflected by the director's NI record. Also I cannot speak to HMRC about the director because I am not an agent. So I guess I will have to retrieve and send P60's and hope for the best.

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By mumpin
09th Apr 2019 11:52

I remember going on a CPD course years ago. The lecturer said something along the lines of "Why would you do that? Why not give HMRC a little bit of money to look after?"
I thought it was sound advice and have always had my Directors pay a small amount of NIC which all arises in month 12.

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to mumpin
09th Apr 2019 12:19

Interesting but sadly not much use to me now.

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By RedFive
09th Apr 2019 12:46

Yes you qualify at LEL and above.

I have paid myself at the PT threshold for the last few years and not paid NI.

In 2017-18 I received £8164 and have just checked my NI record courtesy of the lovely Personal Tax Account and it shows a full 31 years of contributions (my full working life).

Each year is broken down and shows 'Full Year' though interestingly it shows for 2017-18 'You did not make any contributions this year' whereas when I was self employed it shows the contributons as 53 weeks (as I paid Class 2).

EDIT: just re-read your question and I think you are confusing the bit where is states "You did not make any contributions this year" which is a statement of fact - he didn't. However just above that it should state 'FULL YEAR' in exactly the same way as when an actual contribution is made.

Check the Summary for 'years of full contributions'.

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to RedFive
09th Apr 2019 13:21

That is the case here and I feel a fool although the wording could be more reassuring! Many thanks for clearing this up - the director is my wife and this will make for a much happier dinner table discussion!

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