NI credits for time on SSP

CPAG WB&TC; Handbook p 780 states that credits for SSP must be claimed before the end of the benefit year following the tax year in which you are entitled to the credit.  This can be extended if it is reasonable to do so.  I have two questions:

1) How do people know that they have to do this?

2) Is this rule strictly adhered to? I have clients who appear to have been awarded credits without claiming them.  I rang the Jobcentre to query this and the person I spoke to, who dealt with ESA, said credits were awarded automatically.

I’d trust our office cleaner over a jobcentre official.

Agreed, but do you know the answer?

Which states

(4) A day shall not be a day to which paragraph (2)(a) applies unless the person concerned has–
(a) before the end of the benefit year immediately following the year in which that day fell; or
(b) within such further time as may be reasonable in the circumstances of the case,
furnished to the Secretary of State notice in writing of the grounds on which he claims to be entitled to be credited with earnings

Thanks for that guys.  But how do people know they have to do this?  I’m wondering if most people are claiming the credits in time or if 8(4)(b) is being applied rather generously.

anned - 10 May 2012 10:41 AM

Thanks for that guys.  But how do people know they have to do this?  I’m wondering if most people are claiming the credits in time or if 8(4)(b) is being applied rather generously.

They used to notify you (the Inland Revenue I think) at the end of the tax year about any deficiencies in your contributions record.  Those notices advised about the option of paying class 3s, eg to help boost your state retirement pension, but I’m not sure if they ever advised about the option of applying for credits to help you qualify for the likes of IB or contributory JSA.  In any event, they haven’t sent those letters for some time.

With ESA and other benefits the department’s practice I believe is too automatically award you credits even though in theory you might not be entitled to them.  It’s understandable really as the alternative would be millions of people each year applying for credits.  The Upper tribunal, however, have been critical of the fact that the law on credits is out of step with the above practice.  The law still requires a person to apply for credits each year. 

With SSP it’s slightly different, however, because that’s administered by HMRC.  My understanding is that HMRC cannot legally award you credits as that is the responsibility of the DWP.  HMRC obviously knows you’re on SSP and it will add the amount of SSP you receive to your “year to date” earnings figure for tax/NI purposes.  I recall reading caselaw which explained how HMRC and DWP work together in practice to allow the DWP to administer contributory benefits.  I’m afraid I haven’t the time to search for that now.  But I’m not sure if that working practice extends to HMRC notifying the DWP that someone is receiving SSP.  At that particular stage, why would the DWP be interested?

Perhaps it’s wise for anyone who receives SSP to apply for credits to the DWP after all, but as you say Anned how would they know to do that.  I suspect that most people won’t be adversely affected, however, as they probably wouldn’t qualify for credits anyway due to their earnings from work being enough to satisfy the 2nd contribution condition for contributory benefits. 

The fact they were entitled to SSP means their average earnings in the 8 weeks prior to the start of their SSP would have had to be greater than the lower earnings limit (LEL).  Still, the longer they remain on SSP, the bigger the risk that their earnings do not in fact rescue them.  Even the top rate of SSP (£85.85 p/w), is less than the LEL (£107 p/w). 

My understanding of the 2nd contribution condition for benefits is that none of those SSP earnings, therefore, count, because they have to at least equal the LEL before they produce an “earnings factor”.  So, even if you normally earn more than the LEL when in work, the total of those earnings might not be enough on their own to satisfy the 2nd contribution condition where you’ve had a prolonged period on SSP.  Consequently, you would very much need the credits provided by SSP in those circumstances in order to top your earnings factor up and satisfy the 2nd contribution condition.

Obviously, those not returning to work after 28 weeks’ SSP and claiming ESA would at that point put the DWP on notice of the SSP.  But what about those not entitled to ESA, eg working partner, or who return to work within 28 weeks?  It’s an interesting point Anned.

I was on SSP for a short time in the 1990’s.  The Contributions Agency wrote and asked me if I wanted to pay late contributions.  Nothing was said about applying for credits.  So, yes how is the average punter supposed to know.