Peter Arrowsmith FCA highlights a seclection of NIC matters and advises on a potential opportunity for some women to improve their state pension entitlement.
National Insurance Contributions Bill 2007
The expected Bill was presented and received its First reading in the Commons on 12 November.
There are only seven clauses and they cover only the changes already expected - the ability to increase the 2009/10 Upper Earnings Limit (UEL) above the rate of inflation (that for 2008/09 is within current tolerances) and to fix the new Upper Accrual Point for 2009/10 at £770 per week (that is the same as the planned 2008/09 UEL).
The overall effect is to increase the UEL as announced in the Budget but to continue benefit entitlement only up to what the UEL would have been, had the additional increases not been made. This increases the inflow to the National Insurance Fund, whilst freezing some of the outflow.
Tips and National Minimum Wage
I mentioned last month a National Minimum Wage case regarding tips (see http://articles.taxationweb.co.uk/index.php?id=422). HM Revenue and Customs has indicated that it will be appealing the decision.
Tip of the month - December 2007
Steve Webb MP recently highlighted on BBC Radio 4's Moneybox that although many married women do not qualify for any or only a small pension in their own right, there are some who have overlooked opportunities in the more recent past and may still be able to do something about it.
The issue will not help those whose husbands are five years or more older than they are or those receiving Pension Credit top-ups or certain other benefits.
The opportunity arises from the extension until April 2009 of the time limit for paying without application of the penalty rate Class 3 contributions for the years 1996/97 to 2001/02. Although such women should have received a deficiency notice in the past, they may not have appreciated the finer points and implications and simply ignored it. In some cases paying just one year's contributions will take them over the 25% minimum threshold that applies until 2010.
Where appropriate, Class 3 contributions to be paid can be deducted from state pension arrears.
It should be borne in mind that state pension received is taxable in the year in which it accrued.
Those who think that they might fall into this category should first discuss the position with the HMRC National Insurance Deficiency Helpline (whether or not they think they have received such documents in the past) on 08459 155996. The number is manned Mondays to Fridays 8am - 8pm and Saturdays 8am - 4pm.
The above is taken from 'NIC Newsletter' (3/12/2007), and is reproduced with the kind permission of Peter Arrowsmith FCA, who retains the copyright.
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