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Post Info TOPIC: NI contributions and state benefits


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NI contributions and state benefits
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Hi!

I'm getting more and more confused reading HMRC guidance. As a company director i want to optimize my wage structure,however I don't want to lose entitlement to some state benefits i.e. pension.When reading HMRC pages I found ,that as long as I'm earning more than £109 a week I keep the right to State pension " as long as you earn more than £109 a week (2013-14) you can still build up your entitlement to a State Pension and certain other benefits" and few pages further I found this "Class 1A and Class 1B contributions - paid by employers only - don't count towards any state benefits" .Can anyone clarify this?

 

Many thanks

 

Tom 



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Hi Tom,

You appear to be confusing employee with employer. As an employee of your limited company you will maintain your entitlement to certain benefits by earning above the LEL of £109.00 and as long as it is below £148.00, will pay no NIC either as an employee or the company as an employer. Employers contributions as you mentioned do not count towards state benefits. Note that for 2014-15 there is an allowance of £2000.00 against Employers NIC and therefore the optimum salary, depending on individual circumstances, should be £10,000.00 pa. hth

Regards

Gordon

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Hi Gordon!

thanks for your help.Now it's clear!

Regards

Tom

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