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Phantom NIC Shortfall for 2005/6
by David Butler
We understand that a number of HMRC’s “customers” have been notified by letter of an apparent shortfall in National Insurance Contributions for 2005/6. The letter suggests they might want to make a voluntary payment of some further (Class 3) NIC to make 2005/2006 a Qualifying Year for entitlement to the NI Retirement Pension; or alternatively to fill in forms and/or send copies of P60s to demonstrate that sufficient contributions have been paid to make 2005/6 a Qualifying Year.
It appears that in at least some cases the review is flawed - this seems particularly likely to be the case where earnings have been in excess of the Lower Earnings Limit of £4,264 but below the Primary Threshold of £4,895 (in which case no contribution is actually payable but earnings nonetheless count for pension purposes - a state of affairs that seems to have confused the HMRC computer as much as it confuses the rest of us). It is understood that a re-review is being carried out at the moment, and a second letter will eventually (over the next several months) appear confirming in such cases that 2005/2006 is a Qualifying Year after all.
For further advice on this and other PAYE and NIC matters contact David Butler.
