This legislation was designed to help the lowest-paid employees in the economy build a free state pension and have access to state benefits. By a quirk of the system, it benefits company directors and sectaries who pay themselves a low salary.
If you earn an average of more than £520 per month or £6,240 per year (the lower earnings limit LEL for 2021/2022) you have the full benefit of employment Class 1 National Insurance without paying National Insurance. Meaning you will have access to the following free National Insurance Benefits:-
- State Pension*
- Contribution-based Jobseeker’s Allowance
- Contribution-based Employment and Support Allowance
- Maternity Allowance
- Bereavement Payment
- Bereavement Allowance
- Widowed Parent’s Allowance
- Bereavement Support Payment