NIC: Health worker short-changed
Ambulance driver, whose job was partly hived-off to a private company, found he didn’t qualify for state benefits as he hadn’t paid enough class 1 NIC on either employment.
You might also be interested in
Replies (8)
Please login or register to join the discussion.
Interesting ... in that even where the 'aggregated earnings' basis for calculating NICs *should* be applied, it seldom is (where lazy people and poor systems don't pick up the need or grab the necessary figures from two employments).
But in situation set out in this article, however unfortunate (and indeed unfair morally), the plaintiff never had a case.
The moral is ... try to avoid having multiple low-paid jobs (even if they total an adequate 'salary').
You have to feel sorry for this guy, though. Originally he worked for a single employer and was only put into this position when part of his job was privatised. The rules for NI are so complex and little-understood that it's not surprising he didn't realise this could be the consequence. I doubt if one in a thousand employees would have done so. I suppose he could find he gets a reduced state pension because of this, too.
Hi Neil, long time no see (what with Covid etc) ... but I totally agree.
I was probably a bit cavalier in only saying that the result for the plaintiff was "unfortunate (and indeed unfair morally)".
There's no way he would have been aware of the impact (probably just pleased to have retained most of his income) .... the responsibility for identifying the potential problem lies squarely with the employers (particularly the new one) - but in my experience they may not have had suitably trained staff to understand.
Ultimately it's another of those 'anomalies' that can only be truly sorted out with a radical overhaul of NI legislation (the simplest of which would be to apply tax-like rules to cumulative YTD earnings of an individual across all employments) ... but then I would say that with retirement looming on my horizon!
It is possible that state pension entitlement could be reduced although only 35 years in the contribution record is required to avoid that. It would be sensible to obtain a pension statement to check the situation but if there's likely to be a shortfall it can be avoided by paying Class 3 (voluntary) NI contributions. The catch is they are rather expensive - currently £15.40 a week.
"In September 2013, due to health problems, Long retired from the NHS pension scheme but decided to continue to work for the NHS on a reduced scale."
Odd set of words
But the correct time to consider the subsequent pension position
I bet he did not complain when splitting his employment into two resulted in him paying a lower overall sum in national insurance. He cannot have it both ways.
The problems appear to have occurred because in some weeks (or months) the pay from both jobs fell below the lower earnings limit - currently £120 a week.
Sometimes having multiple jobs can be financially beneficial because if pay is between the lower earnings limit and primary threshold (£184 a week - for the employee) or secondary threshold (£170 a week - for the employer) that's recorded as having made NI contributions for the week (or month) even though the contribution rate is 0%.
I cannot understand why the government have avoided such an obvious way to increase their tax income. If class 1 NIC liability was treated as per the tax rules on multiple employments the Exchequer would benefit immensely.