From: "Andy Pandy" 
Newsgroups: misc.taxes uk.business.accountancy uk.business.payroll uk.consultants uk.finance
Subject: Re: QUERY: National Insurance contribution woes
Date: Mon, 1 Oct 2007 19:34:41 +0100
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"Andrew Wan"  wrote in message
news:1191255969.518041.72230@g4g2000hsf.googlegroups.com...
> I got a letter from HM Revenue & Customs saying:
>
> "Our records for the 2004-2005 tax year show that you have not paid
or
> been credited with enough National
>
> Insurance contributions to make this year count towards your basic
> State Pension.
>
> You may be able to pay voluntary National Insurance contributions to
> make up the shortfall and protect
>
> your entitlement to basic State Pension.
>
> Number of Weeks needed: 8
> Total Amount required: £57.20"
>
> Why are they saying this? I worked part-time in a job from 03/2003
to
> 09/2004. I graduated full-time
>
> education in 06/2003 and started a a part-time college course in
> 09/2003 - 09/2004. I earned less than £90
>
> a week.
>
> Shouldn't HMRC have deducted NI from me? I remember seeing it being
> deducted from my payslips, as well as
>
> PAYE tax. Why are they bothering me now about a shortfall? I didn't
> however tell them when I stopped my
>
> job in 09/2004, did that confuse HMRC? From 09/2004 onwards I went
> back into full-time eduction without
>
> working.
>
> I phoned up HMRC and queried about this. But the guy told me to
ignore
> the letter. I don't want to ignore
>
> it. Please can someone enlighten me to whether this is wrong for NI
> when I only worked 1/4 of 2004/05 tax
>
> year before going back into full-time education?

The NI system is utterly shite, it started off as a state insurance
scheme but has been tweaked over the years to meet political targets
without regard to fairness and transparency.

What we have now is a complicated unfair farce of a system, where some
people are forced to pay lots of NI but get no benefits, others pay no
NI and get the benefits free, and others find the benefits are useless
anyway as they simply reduce means tested benefits!

What the letter is telling you is that because of your earnings
pattern, that tax year didn't count as qualifying year towards the
basic state pension, but was quite close. You are invited to make up
the shortfall.

However, assuming you are not going to reach state pension age in the
next 3 years, and that the pension bill going through parliament now
gets passed (almost certain), you will only need 30 qualifying years
to get a full basic state pension.  So if you think you'll be earning
a reasonable wage for at least 30 years of your working life you
should be OK without paying what they are asking. But you may want to
if you're unsure (IIRC they give you 6 years or so).

For more info pour yourself a stiff drink and have a read of:

http://www.pensions.gov.uk/pdf/np46/np46apr05.pdf

(gives the current rules - the changes going through parliament now
will reduce the qualifying years to 30 from April 2010)

--
Andy