The Payroll Site

What does qualifying earnings mean?

Qualifying earnings has a specific meaning for pensions. In the tax year 2017/18:

  • Qualifying earnings is a band of earnings, which means it is always less than gross pay.
  • The band starts at £490/m (or £113/wk) so earnings below this aren't counted.
  • A pound above the threshold counts as a pound of qualifying earnings.
  • The band ends at £3,750/m (or £866/wk).
  • Any pay that doesn't count for national insurance purposes, doesn't count for qualifying earnings either.

In the 2018/19 tax year, the band starts at £503/m (or £116/wk) and ends at £3,863/m (or £892/wk).

The minimum amounts you must contribute to an auto enrolment pension are based on qualifying earnings, not gross pay.

When you tell your pension company about contribution levels, you must say whether they are a percentage of qualifying earnings, gross pay, or something else. You should set the contributions on The Payroll Site using the same choice.

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