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Chapter NIM41205

Document Cited in Related
Vincent
Published date11 April 2016
Record NumberNIM41205
CourtHM Revenue & Customs
IssuerHM Revenue & Customs

From 6 April 1975, in line with the move away from a flat rate contribution to a contribution liability based on earnings, Class 1 credits were awarded at a standard rate equivalent to a payment of weekly earnings at the lower earnings limit in force at the time. From 6 April 1987, instead of a Class 1 credit being awarded, a person is instead credited with an amount of notional earnings equivalent to the Lower Earnings Limit (LEL) in force at the end of each pay week (Saturday to Sunday). However, “credited earnings” are normally referred to as “credits”, although this is not the term used in legislation so may not be appropriate in a formal legal document. Class 3 credits continue to be credited contributions.

The customer’s NI record shows an amount of “earnings” for the period for which credits are due, and the number of “credit”.

For example,

If a person is entitled to be credited with earnings for 6 weeks during the 2004-2005 tax year, their NPS account will show earnings of £474 (6 X £79) and the number of weeks (6) this represents. These “earnings” can help the customer qualify for a range of contributory benefits but are not included in calculations of the total earnings figure used in SERPs or state second pension. Under the rules of 1975 Social Security scheme there is no link between a person’s past employment history and the award of credited earnings However, a person claiming state...

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