Optimum Salary Given Rise In Personal Allowance

[Nixon Williams]

To earn a one year credit towards the state pension for the 2011/12 tax year you need to pay a salary of £5304, so the recommended salary of £7,072 will be sufficient.

You now need 30 year's credits to qualify for the state pension.

The Government are looking at abandoning the NIC relationship for receiving a state pension, but nothing has been firmly announced yet!

Alan

[IR35 Avoider]

Slightly off topic but still relevant:

My accountant advised I take the personal allowance salary, how do I stand when I come to claim my state pension having paid bugger all NIC's?

Each year that you had the personal allowance as salary will count towards basic state pension entitlement. The salary threshold at which you are counted as having contributed for pension purposes is always slightly below the level at which you actually start having to hand over cash in respect of NI. In theory, assuming the current structure applies thoughout your working life, you could get full entitlement to a basic state pension without paying a penny in NI.

A trick for contractors with working spouses and children: if you have a year when you're not working, you will still get that year counted towards your pension if you are the one receiving child benefit. If necessary, I believe it is possible to switch who is the recipient from time to time.

If all else fails, it's probably worth making the small voluntary NI contribution required to make a year count for pension purposes.

[gingerjedi]

Slightly off topic but still relevant:

My accountant advised I take the personal allowance salary, how do I stand when I come to claim my state pension having paid bugger all NIC's?

[MrRobin]

The secondary threshold has been increased to £136 per week, so that means you can receive a salary of £7,072 and there will be no employees or employers NI due.

[DeludedAussie]

I just wondered if NI is still due on a salary of 7K (or the figure before tax starts to take place)?

Does anyone know the salary which can be taken in the 2011->2012 tax year before NI contributions start