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National insurance shorfall -who is responsible??

Client has a 62 year old employee , whos on BR, (presume drawing a pension? need to ask)......

Didn't find your answer?

... he has been advised he has a national insurance shortfall, is the client to blame, or me as payroll provider, or the employee himself?

His annual salary from clients business is around £5k

Been pushed onto me....

TIA

Catherine

Replies (13)

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By Calculatorboy
13th May 2021 20:21

Lots of people who don't earn enough have shortfalls

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By sarahg
13th May 2021 20:46

I'm not sure I understand - at £5k he doesn't earn enough to pay NI on that job

We need a lot more information to be able to help with this

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By Hugo Fair
13th May 2021 21:10

"he has been advised he has a national insurance shortfall" ... what has he actually been told (and by whom)?
There is a world of difference between HMRC not having received class 1 NICs that have been reported as due - and HMRC not having received class 2 or 4 NICs that they believe to be due ... or a state pension forecast indicating insufficient contribution years.
Quoted age and BR tax code are irrelevant to any likely NICs issue.
Best guess is that he has other employment (possibly self-employment) and that this has nothing to do with OP (as payroll provider) ... but who knows without further info.

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By David Ex
13th May 2021 22:12

Not sure what services you provide but, on the information that you give, I don’t see how it was part of your responsibility to provide NI planning advice.

What services were specified in your contract?

The client would have known no NI was being paid. Most people understand the link between contributions and benefits.

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Replying to David Ex:
RLI
By lionofludesch
14th May 2021 07:25

David wrote:

The client would have known no NI was being paid. Most people understand the link between contributions and benefits.

That would've made sense 20 years ago.

But in these crazy days, you don't have to pay a penny in NIC to get a year credited for pension purposes.

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By Paul Crowley
13th May 2021 23:30

Not earning enough to qualify
Nobody's fault
Client and employee do not understand the rules.

Is employee a relation to employer?
If so tell employer to pay employee more money

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RLI
By lionofludesch
14th May 2021 07:22

Employee's fault.

He needed a better paid job.

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Replying to lionofludesch:
A Putey FACA
By Arthur Putey
14th May 2021 07:40

... or a shorter prison sentence? Who knows what he's been doing since the age of 16.

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Replying to Arthur Putey:
RLI
By lionofludesch
14th May 2021 08:24

Arthur Putey wrote:

... or a shorter prison sentence? Who knows what he's been doing since the age of 16.

I think he might get credits for that.

But don't quote me on that.

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Replying to lionofludesch:
A Putey FACA
By Arthur Putey
14th May 2021 09:05

Apparently not, from casual research: As a prisoner you do not receive National Insurance credits but you can however make voluntary contributions towards your State Pension and these can be paid up to six years after the tax year in which you were released from prison.

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By Paul D Utherone
14th May 2021 09:07

As others have said, shortfall in what sense? Qualifying years for full state pension? He's of an age where he falls across two different methods of calculation, and contracting out in the past can give odd results, but if so that hardly seems to be something to do with you or your client

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By cathhammond
14th May 2021 09:08

Thanks all
Dug deeper, turns out he worked for a big gas providing company for 42 years so over 35 years....
the revenue said he had shortfall since in this employment, client panicked as was getting blame . I've now advised and also the employee needs to contact NI dept himself. Think the root of it is he was panicking about getting full state pension...

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Replying to cathhammond:
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By Paul Crowley
14th May 2021 10:15

So this was probably NI people sending a letter out to employee offering voluntary top up

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