For each week that your employee earns between £90 (the lower earnings limit) and £105 (the primary threshold) in 2008/09, they will be treated as paying National Insurance contributions even though no contributions are deducted from her pay.
This means that she will continue to build up entitlement to contributory benefits such as the basic State Pension and Incapacity Benefit, even though she is not paying standard rate National Insurance contributions.
However, if she earns less than the lower earnings limit of £90 per week, she will not pay National Insurance contributions and will not receive credit for state pension and benefit purposes. She may still be able to protect her entitlement to the basic State Pension if she pays NI class 3 voluntary contributions, gets certain benefits or if she is a carer who receives Home Responsibilities Protection.
By Jo Nockels
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