What are qualifying earnings?
The phrase 'qualifying earnings' has a specific meaning for pensions. For the tax years 2021/22 to 2023/24:
- 'Qualifying earnings' is a band of earnings, which means that it is always less than gross pay.
- The band starts at £520/m (or £120/wk) so earnings below this aren't counted.
- A pound above the threshold counts as a pound of qualifying earnings.
- The band ends at £4,189/m (or £967/wk).
- Any pay that doesn't count for National Insurance purposes, doesn't count as qualifying earnings either.
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.