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NI Qualifying Years and Voluntary Payments

NI Qualifying Years and Voluntary Payments

Old Nov 17th 2023, 1:09 pm
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Default NI Qualifying Years and Voluntary Payments

Hi all,

I moved to the US last autumn, and all my income since then has been from my job here.


However, my job was an internal company transfer and a good chunk of my pay comes in Restricted Stock Units. These are stocks which are "granted" in a yearly process and then vest (when they are actually mine and can sell them) over future years. On vest, these count as regular income. The proportion treated as US income is only the proportion of time between grant and vest that I was in the US, and vice versa for the UK. Therefore any RSUs granted since I moved are straightforwardly US income. However, RSUs granted before I moved, but vesting since I moved are partially US income and partially UK income.


This is a pain for taxation, but I am interested in if this UK income would count towards qualifying pension years. The Govt website says a qualifying year is one in which you make at least £242/week. It doesn't say how many weeks/pay periods this needs to be true for. My RSUs vest in 2 largeish lumps per year and I pay NI on these. Do these constitute a qualifying year? Is there an £X total NI payment for the year that qualifies it?
If not, am I eligible for class 2? I am not employed in the UK (I got a P45 when I left) but I do get PAYE payslips from each vest with tax/NI withheld.
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Old Nov 17th 2023, 1:43 pm
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Default Re: NI Qualifying Years and Voluntary Payments

I believe that so long as you pay NI contributions on at least the annual lower earnings limits for each year then that year will count as a qualifying year, regardless of how many weeks you actually pay NI. The lower earnings limit is £6,396 for 2024, if your annual payments exceed that and NI is deducted then they should count. You should be able to confirm that online, shortly after the current UK tax year ends by checking your NI record.

If you were employed in the UK for at least 3 years, and are currently employed in the US, then you should qualify for Class 2 voluntary contributions.

Last edited by Glasgow Girl; Nov 17th 2023 at 1:45 pm.
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Old Nov 17th 2023, 2:19 pm
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Default Re: NI Qualifying Years and Voluntary Payments

Great thanks. I know that unlike tax, NI is dependent on the payroll frequency e.g. if you get a bonus one period you will likely pay different amount of NI depending on if your payroll runs weekly or monthly. And I couldn't see any reference to an annual value for pension qualifying purposes, so this is useful.
I will be above that so I should get a qualifying year this tax year anyway, and then I will register for class 2 for 24/25 onwards.
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Old Nov 30th 2023, 4:50 pm
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Default Re: NI Qualifying Years and Voluntary Payments

I have a similar question - we are currently making voluntary Class 2 contributions. My husband needs one more year to bring him to a full pension but is retiring at the end of 2023. Will he be eligible to make a full year's payment even though he will only have worked for 3/4 of the UK tax year? The letter they send normally lists the number of weeks and cost per week. If he only pays for the weeks he actually worked, does that increase the pension pro rata, or do only full years count?
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Old Nov 30th 2023, 6:57 pm
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Default Re: NI Qualifying Years and Voluntary Payments

Only full years count. Continue to pay Class 2 until you have made the full contribution for this NI year and then stop. No one will know or care that he retired a few months prior.
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Old Dec 2nd 2023, 10:00 pm
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Default Re: NI Qualifying Years and Voluntary Payments

Originally Posted by porkedpie
..... However, my job was an internal company transfer and a good chunk of my pay comes in Restricted Stock Units. These are stocks which are "granted" in a yearly process and then vest (when they are actually mine and can sell them) over future years. On vest, these count as regular income. The proportion treated as US income is only the proportion of time between grant and vest that I was in the US, and vice versa for the UK. Therefore any RSUs granted since I moved are straightforwardly US income. However, RSUs granted before I moved, but vesting since I moved are partially US income and partially UK income.


This is a pain for taxation, but I am interested in if this UK income would count towards qualifying pension years. The Govt website says a qualifying year is one in which you make at least £242/week. It doesn't say how many weeks/pay periods this needs to be true for. ....
I suspect that the rules to prove the answer to your question are buried in the details of the Directors and Higher Paid Employee's Act of c1976 (which I suspect got rolled into some other tax reform legislation at some point), but without digging into that, the Act basically says that everything* "given" to you by your employer is treated as income, and taxed accordingly, with certain exceptions.

* The reason I say "everything", is that the threshold for being treated as "a higher paid employee" under the Act, is not subject to indexation and has never been increased, from the original amount of £8,500 per year! So now almost everyone working in the UK is caught by the rules for higher paid employees. The rules were introduced to stop employers giving non-cash benefits to employees and thereby avoiding income tax, which was the reason that company cars became such a big deal in the UK in the 1970's.

Last edited by Pulaski; Dec 2nd 2023 at 10:05 pm.
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Old Dec 4th 2023, 3:02 pm
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Default Re: NI Qualifying Years and Voluntary Payments

I don't understand your point. I know that it counts as UK income for tax and NI purposes, my question was what constitutes a full year on NI for pension purposes.
Which, according to GG is that if you earn and pay NI on the LEL (£6,396) it counts as a full year regardless on when it is earned e.g. in one single pay period, or £123 each week or £522 each month.
A search for the act you mention returns no results on legislation.gov.uk so I can't investigate further.
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Old Dec 11th 2023, 8:46 pm
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Default Re: NI Qualifying Years and Voluntary Payments

Originally Posted by Glasgow Girl
Only full years count. Continue to pay Class 2 until you have made the full contribution for this NI year and then stop. No one will know or care that he retired a few months prior.
Thanks for this info. We will pay at the end of the UK tax year 2024 and then hopefully he will start collecting in August. Twice as much as he would have been entitled to had we not followed the advice in this forum!
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