National Insurance errors discussion thread

Former_MSE_Alana · 1 February 2011 at 5:20PM

This is the discussion thread for the MSE guide on

To discuss or ask a question click reply.

jeanp · 2 February 2011 at 2:21PM

I wonder if anyone knows the answer to this question...

I am self employed but also work for companies who pay my NI but not my tax. But while I'm working for them I'm still saying my self employed NI.
Does that mean I am double paying or does that get taken into account when I do my tax at the end of the year?
I have already tried asking various people who work for The taxman and NI but they seem to only have a basic knowledge of how to work a computer and keep sending me to the FAQ page no matter what question I ask them.

222telme · 2 February 2011 at 6:00PM

if you have paid in for more than the required number of years, 30 years, why is NI still deducted? i have found out since applying for job seekers that as i have paid in for this time, it makes no difference as to if i work and pay, or its paid via JSA, as the end result is that my state pension will not be increased even if i dont pay or continue to pay? so if you have paid in for the maximum number of years, can anything be claimed back ?

BoGoF · 2 February 2011 at 6:10PM

No you can't claim anything back.

Remember the 30 years is to qualify for basic state pension only.

Oh, and technically none of these 2 questions fall within the discussion topic

markbernstein · 2 February 2011 at 7:58PM

In the guide it says

To gain a qualifying year, you need to earn a set minimum during a tax year (April to April) and pay the required NI. For 2010-11, this is £5,044 for employees or £5,075 for the self-employed.

Is this actually true as it stands or is it shorthand for a more complex situation?

I'm asking because the statement has given me a bit of a fright. I'm semi-retired (but below pension age) and self-employed, and I'm earning less than that sum per year. I was under the impression that while I could ask not to have to pay NI contributions because of my low income, as long as I simply do pay my class 2 NI contributions those years will count as "qualifying years", whatever my actual (that is, lower) income is.

Can someone clear this up for me, please?

wynter-rose · 2 February 2011 at 8:18PM

I was a self employed taxi driver and after years of this and paying my tax and ni i then decided to go and work for someone else.
after a few problems within the company and the way i was treated i then resigned. then found out i was pregnant, when i went to see what i could clame i was told that all the ni i payed being self employed now dosnt count. it only count while i was working after i stoped being self employed it seems to dissapear and im not entitled to anything. how can all the years of paying my ni not count, ????????? im so confused.

Niemand · 5 February 2011 at 4:51PM

wynter-rose wrote: »

I was a self employed taxi driver and after years of this and paying my tax and ni i then decided to go and work for someone else. [...] i was told that all the ni i payed being self employed now dosnt count. it only count while i was working after i stoped being self employed it seems to dissapear and im not entitled to anything. how can all the years of paying my ni not count, ????????? im so confused.

wynter-rose, I am no expert in this, but while doing some research I came across Wikipedia's 'National Insurance' entry were it says Class 1A, 1B and 4 contributions do not count towards benefit entitlement. Furthermore, it has this to say about Class 2 contributions—which are what you pay if you are self-employed:

For the most part, unlike Class 1, they do not form part of a qualifying contribution record for contributions-based Jobseekers Allowance.

So it seems that you may not be able to claim benefits for contributions made whilst self-employed. It's certainly worth looking into further.

CIS · 5 February 2011 at 5:32PM

I'm asking because the statement has given me a bit of a fright. I'm semi-retired (but below pension age) and self-employed, and I'm earning less than that sum per year. I was under the impression that while I could ask not to have to pay NI contributions because of my low income, as long as I simply do pay my class 2 NI contributions those years will count as "qualifying years", whatever my actual (that is, lower) income is.

NI contributions whether paid or credited are looked at on your National Insurance records when calcualting the state pension (irrespective of your earnings). Any you are currently paying/have paid will be taken in to account.

anniecave · 5 February 2011 at 5:58PM

theres a difference between contributions that count towards benefits (like JSA) and contributions that count towards state pension.
Lots of types of contributions count towards the state pension (for example credits that a mother gets whilst looking after young children) but don't count towards being able to get job seekers allowance or certain other benefits.

markbernstein · 5 February 2011 at 6:07PM

CIS wrote: »

NI contributions whether paid or credited are looked at on your National Insurance records when calcualting the state pension (irrespective of your earnings). Any you are currently paying/have paid will be taken in to account.

Thanks for clarifying!

Perhaps a less short-hand (i.e., "more correct") phrasing of that point could be found for the guide?

esperanza2 · 8 February 2011 at 8:04AM

markbernstein wrote: »

In the guide it says

Is this actually true as it stands or is it shorthand for a more complex situation?

I'm asking because the statement has given me a bit of a fright. I'm semi-retired (but below pension age) and self-employed, and I'm earning less than that sum per year. I was under the impression that while I could ask not to have to pay NI contributions because of my low income, as long as I simply do pay my class 2 NI contributions those years will count as "qualifying years", whatever my actual (that is, lower) income is.

Can someone clear this up for me, please?

CIS is right with the reply that all the NI you have paid or had credited counts towards your pension. Also it might make it clearer to know that the difference is connected to how the payment information gets on the records.
For employees - employers send details in at the end of every tax year showing how much each employee was paid and also how much NI was deducted. It's actually the earnings figure that is used to work out benefits rather than the NI paid. (And there is a small band of earnings - this tax year between £97 and £110 weekly ( £421 to £476 monthly etc) - where no NI has to be deducted but the pay still counts for benefits.)

For self-employed - you send the tax office your own earnings details on a self-assessment return. Your profit from self-employment is the figure the tax office use to work out what Class 4 national insurance you need to pay (if any - this year Class 4 is due if your profit is £5715 or more). But it's the Class 2 contributions that you pay during the year that count for benefits (pension and other benefits but not JSA). Class 2 is £2.40 a week this year. Like you say if your profits are low (below £5075 this year) you can choose whether or not to pay them- but if you do pay then they count for benefits.

One other difference is that it is possible for an employee, depending how much they earn, to have a 'qualifying year' for benefits even if they don't work for the full year. But because Class 2 is a flat rate amount per week you have to pay 52 weeks in a tax year for the year to count for benefits. (Any gap could be made up by credits or employee earnings in the same year though)

Hope that helps (anyone still awake?!

)

National Insurance errors discussion thread

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