Just checking NI For OH - Not formally Self Employed

Hi

I just want to check the right thing to do, or whether the right thing is to do nothing.

My OH has a nearly full NI Contribution record (Child benefit / Teaching work) until April 2014 when she left work to look after DS2. She will be back to work this year now all that is sorted.

During the gap she worked as a tutor for between 7 and 10 children (individually!) with about £7000 a year typical income. This was declared on her self Assessment, as other income, but no tax was due as within her 0% allowance. She was not declared as Self Employed, or Sole Trader as the definitions of these didn't seem to fit what she was doing .

However, reading around the latest budget got me thinking about NI - and whether she should be paying some to make sure she gets the most out of her SP. So I think my questions are:

* Can she still pay Class 2 contribution for the last three years (maybe a different answer)
* Should she do this
* Will her not being formally declared as Self Employed make a difference, and can we do that retrospectively - or even will we fall foul of HMRC for not being timely in this declaration.

Hope thats enough information - happy to add more
I think I saw you in an ice cream parlour
Drinking milk shakes, cold and long
Smiling and waving and looking so fine
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Comments

  • Tigsteroonie
    Tigsteroonie Posts: 24,954
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    Was she still receiving CB during that period as she may have had credits applied, what does the Contribution record say in terms of payments to make up for past years?
    (https://www.gov.uk/check-national-insurance-record)
    :heartpuls Mrs Marleyboy :heartpuls

    MSE: many of the benefits of a helpful family, without disadvantages like having to compete for the tv remote

    :) Proud Parents to an Aut-some son :)
  • mark55man
    mark55man Posts: 7,905
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    Yes she was, but I did then have to pay it back as earning over 60K. My youngest was 14 when she stopped working

    I will check her record - we recently did the gov.verify beta so shouldnt be too hard to get that back up to date
    I think I saw you in an ice cream parlour
    Drinking milk shakes, cold and long
    Smiling and waving and looking so fine
  • mark55man
    mark55man Posts: 7,905
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    So done some research - I think its coming clearer. But not quite sure how to interpret the underneath - grateful for simple advice about what seems to be the best path - given expectation that OH does expect to work until 2024/5
    HMRC wrote:
    2015-16Year is not full - You did not make any contributions this year. Find out more about gaps in your record and how to check them. You can make up the shortfall Pay a voluntary contribution of £733.20 by 5 April 2023. This shortfall may increase after 5 April 2019.

    2014-15Year is not full - You did not make any contributions this year. Find out more about gaps in your record and how to check them. You can make up the shortfall - Pay a voluntary contribution of £722.80 by 5 April 2023. This shortfall may increase after 5 April 2019.

    So as suspected -

    Plus
    HMRC wrote:
    29 years of full contributions
    14 years to contribute before 5 April 2030
    7 years when you did not contribute enough

    And
    HMRC wrote:
    Estimate based on your National Insurance record up to 5 April 2016 £127.96 a week
    Forecast if you contribute another 7 years before 5 April 2030 £155.65 a week
    Your COPE estimate is £18.91 a week.

    So if I read it right then OH needs to make 7 payments between now and 2030. We are early 50s - so that means she should be able to do it by 60 if restarts work this year

    OR - if we have to buy years would it be cheaper to buy these in the year they are due ? Or did this change in this years budget?

    Finally if I do the maths properly 7 years will buy her an additional 27.69 = or 2 years (£1456 will buy her £8pw) = £400 per year which seems a good deal, but I don't need to decide quite now
    I think I saw you in an ice cream parlour
    Drinking milk shakes, cold and long
    Smiling and waving and looking so fine
  • anselld
    anselld Posts: 8,262
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    edited 12 March 2017 at 7:02PM
    Surely the "right thing to do" is register self employed and pay the class 2 as she should have done in the first place.
    Class 2 NICs are a lot cheaper than voluntary contributions.
  • mark55man
    mark55man Posts: 7,905
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    I did check, but if you look at the website - the definition of self employed has a lot of things that weren't applicable. I know if you boil it down to basics she was earning money, and she wasn't employed by anyone else - I would define it more as casual labour than self employed/sole trader like tradesman for example

    for this tax year - how much would the class 2 NIC be as opposed to 700 quid for voluntary
    I think I saw you in an ice cream parlour
    Drinking milk shakes, cold and long
    Smiling and waving and looking so fine
  • Tigsteroonie
    Tigsteroonie Posts: 24,954
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    Not sure you're interpreting the results correctly, but I'm not an expert.

    I read this as 7 years where the contributions were insufficient, but you can only opt to "top up" 2 of those years (so 5 must have been some time ago, I think you can only top up recent years).

    She has 29 years contributions. I think 35 are needed for the new State Pension (I'm referencing this page: https://www.gov.uk/new-state-pension/how-its-calculated) so she actually only needs another 6 years, or 4 years if you pay the top-up for those 2 years which are short. And she's got 14 years between now and her retirement age in which to make those contributions. So she's looking pretty good :)

    But I'm rather hoping somebody who knows more about this than me comes along with a definitive answer for you :)
    :heartpuls Mrs Marleyboy :heartpuls

    MSE: many of the benefits of a helpful family, without disadvantages like having to compete for the tv remote

    :) Proud Parents to an Aut-some son :)
  • mark55man
    mark55man Posts: 7,905
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    That sounds fine - yes the first years were all in the 80s when she was at college / living overseas. But as you say - looks like we have plenty of time. So as the rate for voluntary is fixed until 2019 I will leave it for now.

    I think I was confused because of the change last year with people worrying about pre 2016 and post 2016 - but the govt website you pointed me out was quite clear - current estimate £130 against max £155 - so nearly there with some options
    I think I saw you in an ice cream parlour
    Drinking milk shakes, cold and long
    Smiling and waving and looking so fine
  • anselld
    anselld Posts: 8,262
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    mark88man wrote: »
    I did check, but if you look at the website - the definition of self employed has a lot of things that weren't applicable. I know if you boil it down to basics she was earning money, and she wasn't employed by anyone else - I would define it more as casual labour than self employed/sole trader like tradesman for example

    for this tax year - how much would the class 2 NIC be as opposed to 700 quid for voluntary

    https://www.gov.uk/working-for-yourself
    "You're likely to be trading if you are paid for a service you provide".
    "If you are trading you are self-employed".

    Class 2 NICs are £2.80 per week.
  • mark88man wrote: »
    she wasn't employed by anyone else - I would define it more as casual labour than self employed/sole trader like tradesman for example
    HMRC would treat her as self-employed!
  • anselld
    anselld Posts: 8,262
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    mark88man wrote: »
    I will leave it for now.

    It should be her choice not yours. She is currently at risk of being fined for failure to declare self-employment. It should be her decision whether or not she wishes to rectify that situation regardless of the pension position.

    As far as HMRC are concerned there is no such thing as "casual labour" or "not formally self-employed".
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