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  • FIRST POST
    • mark88man
    • By mark88man 12th Mar 17, 3:30 PM
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    mark88man
    Just checking NI For OH - Not formally Self Employed
    • #1
    • 12th Mar 17, 3:30 PM
    Just checking NI For OH - Not formally Self Employed 12th Mar 17 at 3:30 PM
    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
    Things happen for a reason. Often the reason is we are stupid & make bad decisions.
    Weight 2/15 125.7 Kg : 31/12/16 - 105.5Kg : Targets - 100Kg by 3/17 then 200lb by 31/12/17
    1/17: CC:7524@0% - Car Loan:14K@3.4% - Mort:156K@2.9% - Savings:1k@4.5%
    Decrease in Total Debt for 2016 - £13.4K
Page 1
    • Tigsteroonie
    • By Tigsteroonie 12th Mar 17, 3:32 PM
    • 22,329 Posts
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    Tigsteroonie
    • #2
    • 12th Mar 17, 3:32 PM
    • #2
    • 12th Mar 17, 3:32 PM
    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)
    Going to become Mrs Marleyboy for real

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

    Proud Parents to an Au-some son
    • mark88man
    • By mark88man 12th Mar 17, 4:18 PM
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    mark88man
    • #3
    • 12th Mar 17, 4:18 PM
    • #3
    • 12th Mar 17, 4:18 PM
    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
    Things happen for a reason. Often the reason is we are stupid & make bad decisions.
    Weight 2/15 125.7 Kg : 31/12/16 - 105.5Kg : Targets - 100Kg by 3/17 then 200lb by 31/12/17
    1/17: CC:7524@0% - Car Loan:14K@3.4% - Mort:156K@2.9% - Savings:1k@4.5%
    Decrease in Total Debt for 2016 - £13.4K
    • mark88man
    • By mark88man 12th Mar 17, 5:08 PM
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    mark88man
    • #4
    • 12th Mar 17, 5:08 PM
    • #4
    • 12th Mar 17, 5:08 PM
    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

    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.
    by HMRC
    So as suspected -

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

    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.
    by HMRC
    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
    Things happen for a reason. Often the reason is we are stupid & make bad decisions.
    Weight 2/15 125.7 Kg : 31/12/16 - 105.5Kg : Targets - 100Kg by 3/17 then 200lb by 31/12/17
    1/17: CC:7524@0% - Car Loan:14K@3.4% - Mort:156K@2.9% - Savings:1k@4.5%
    Decrease in Total Debt for 2016 - £13.4K
    • anselld
    • By anselld 12th Mar 17, 5:27 PM
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    anselld
    • #5
    • 12th Mar 17, 5:27 PM
    • #5
    • 12th Mar 17, 5:27 PM
    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.
    Last edited by anselld; 12-03-2017 at 7:02 PM.
    • mark88man
    • By mark88man 12th Mar 17, 6:22 PM
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    mark88man
    • #6
    • 12th Mar 17, 6:22 PM
    • #6
    • 12th Mar 17, 6:22 PM
    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
    Things happen for a reason. Often the reason is we are stupid & make bad decisions.
    Weight 2/15 125.7 Kg : 31/12/16 - 105.5Kg : Targets - 100Kg by 3/17 then 200lb by 31/12/17
    1/17: CC:7524@0% - Car Loan:14K@3.4% - Mort:156K@2.9% - Savings:1k@4.5%
    Decrease in Total Debt for 2016 - £13.4K
    • Tigsteroonie
    • By Tigsteroonie 12th Mar 17, 6:30 PM
    • 22,329 Posts
    • 55,613 Thanks
    Tigsteroonie
    • #7
    • 12th Mar 17, 6:30 PM
    • #7
    • 12th Mar 17, 6:30 PM
    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
    Going to become Mrs Marleyboy for real

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

    Proud Parents to an Au-some son
    • mark88man
    • By mark88man 12th Mar 17, 6:40 PM
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    mark88man
    • #8
    • 12th Mar 17, 6:40 PM
    • #8
    • 12th Mar 17, 6:40 PM
    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
    Things happen for a reason. Often the reason is we are stupid & make bad decisions.
    Weight 2/15 125.7 Kg : 31/12/16 - 105.5Kg : Targets - 100Kg by 3/17 then 200lb by 31/12/17
    1/17: CC:7524@0% - Car Loan:14K@3.4% - Mort:156K@2.9% - Savings:1k@4.5%
    Decrease in Total Debt for 2016 - £13.4K
    • anselld
    • By anselld 12th Mar 17, 6:51 PM
    • 5,045 Posts
    • 4,551 Thanks
    anselld
    • #9
    • 12th Mar 17, 6:51 PM
    • #9
    • 12th Mar 17, 6:51 PM
    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
    Originally posted by mark88man
    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.
    • MoneySavingUser
    • By MoneySavingUser 12th Mar 17, 7:23 PM
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    MoneySavingUser
    she wasn't employed by anyone else - I would define it more as casual labour than self employed/sole trader like tradesman for example
    Originally posted by mark88man
    HMRC would treat her as self-employed!
    • anselld
    • By anselld 12th Mar 17, 9:14 PM
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    anselld
    I will leave it for now.
    Originally posted by mark88man
    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".
    • atush
    • By atush 12th Mar 17, 9:26 PM
    • 15,698 Posts
    • 9,499 Thanks
    atush
    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
    Originally posted by mark88man
    Nope sound SE to me.

    Try to look up Gadgetmind's psot on his wife's SE status? not to many hops to jump I think
    • mark88man
    • By mark88man 12th Mar 17, 9:32 PM
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    mark88man
    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".
    Originally posted by anselld
    The HMRC were informed of the tutoring via comments in the self assessment - it was the HMRC guidance that we looked at, and it didn't seem to fit the definition.

    So to be clear, as is obvious, OH and I do this together, such as agreeing to reassess if we had made the decision, and she ensures her records are accurate and the SA tax return (which she has to do for other reasons) reflects this income, although I complete it for her review and approval.

    I appreciate your help, though as you have made it clear we need to do this more formally. And hopefully she (we) have time to get it sorted for this Tax year
    Things happen for a reason. Often the reason is we are stupid & make bad decisions.
    Weight 2/15 125.7 Kg : 31/12/16 - 105.5Kg : Targets - 100Kg by 3/17 then 200lb by 31/12/17
    1/17: CC:7524@0% - Car Loan:14K@3.4% - Mort:156K@2.9% - Savings:1k@4.5%
    Decrease in Total Debt for 2016 - £13.4K
    • mark88man
    • By mark88man 12th Mar 17, 9:34 PM
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    • 6,353 Thanks
    mark88man
    Nope sound SE to me.

    Try to look up Gadgetmind's psot on his wife's SE status? not to many hops to jump I think
    Originally posted by atush
    OK - thanks atush.

    If you and Gadgetmind have a plan - its probably better than ours
    Things happen for a reason. Often the reason is we are stupid & make bad decisions.
    Weight 2/15 125.7 Kg : 31/12/16 - 105.5Kg : Targets - 100Kg by 3/17 then 200lb by 31/12/17
    1/17: CC:7524@0% - Car Loan:14K@3.4% - Mort:156K@2.9% - Savings:1k@4.5%
    Decrease in Total Debt for 2016 - £13.4K
  • jamesd
    She was self employed so she should make a call to the HMRC self-employed helpline and they can sort that out and maybe the class 2 NI as well. You can go back six years and get the years credited to the NI record as well.

    There also seems to be a problem with the Child Benefit credits. The fact that income is over £60,000 means CB payments can be stopped or must be repaid but that shouldn't stop the named CB recipient of nothing from still getting CB's NI credits.

    If your children are over 16 but still in full time education or training see this to continue to claim the NI credits until she returns to employment.


    Don't worry about HMRC being unhappy, all they will be interested in doing is helping her to pay the NI and telling her to correct her tax return by filling in the self-employment instead of other income pieces. Very unlikely that they would even consider penalties since she did declare on her tax return even if wrongly. Even if they did, her approaching them would make the likely penalty about ten percent of the presumably nil extra tax due, so nil anyway.
    Last edited by jamesd; 12-03-2017 at 11:30 PM.
    • p00hsticks
    • By p00hsticks 12th Mar 17, 10:19 PM
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    p00hsticks
    There also seems to be a problem with the Child Benefit credits. The fact that income is over £60,000 means CB payments can be stopped or must be repaid but that shouldn't stop the named CB recipient of nothing from still getting CB credits.

    If your children are over 16 but still in full time education or training see this to continue to claim the NI credits until she returns to employment.
    Originally posted by jamesd
    According to this,
    https://www.gov.uk/national-insurance-credits/eligibility
    NI credits are only given to those claiming Child Benefit if the child concerned is under 12 - in post #3 the OP says that the youngest child was 14 when she stopped working, which would explain why she didn't get NI credits even though she was getting child benefit.
    • molerat
    • By molerat 12th Mar 17, 11:06 PM
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    molerat
    If she has 29 years it would only be worth purchasing 1 pre 2016 year, the 2nd would not add any value to her pension.

    Her current starting amount is based on the old system - 119.30/30*29 = 115.32 + add pen of 12.64 = £127.96. Adding 1 more year will bring that up to £131.94.

    Her current "new system" calculation is £110.06 (155.65/35*29-18.91) so the old cannot be bettered.

    With so many years left to get the 7 to make up to the maximum through employment there is probably little point in purchasing past years but it is your call.
    Last edited by molerat; 12-03-2017 at 11:14 PM.
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  • jamesd
    Looks as though sorting out the class 2 is worthwhile because it's cheap and will help with early retirement options before age sixty. Assuming there's some prospect of wanting that.
    • mark88man
    • By mark88man 12th Mar 17, 11:58 PM
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    • 6,353 Thanks
    mark88man
    If she has 29 years it would only be worth purchasing 1 pre 2016 year, the 2nd would not add any value to her pension.

    Her current starting amount is based on the old system - 119.30/30*29 = 115.32 + add pen of 12.64 = £127.96. Adding 1 more year will bring that up to £131.94.

    Her current "new system" calculation is £110.06 (155.65/35*29-18.91) so the old cannot be bettered.

    With so many years left to get the 7 to make up to the maximum through employment there is probably little point in purchasing past years but it is your call.
    Originally posted by molerat
    Thank you - we have just submitted the self employment registration. her income was 7.5K last tax year and this tax year so I think she will have to pay class 2's before 14/15 she was employed or on CB (with children <12 so earning NIC credit)

    I think we may end up having to get 2014/2015 and 2015/2016, and then 2016/2017 will follow in due course - but then after that we should only need 3-4 more. Early retirement is a nice thought, but I think will be 60ish at the earliest
    Things happen for a reason. Often the reason is we are stupid & make bad decisions.
    Weight 2/15 125.7 Kg : 31/12/16 - 105.5Kg : Targets - 100Kg by 3/17 then 200lb by 31/12/17
    1/17: CC:7524@0% - Car Loan:14K@3.4% - Mort:156K@2.9% - Savings:1k@4.5%
    Decrease in Total Debt for 2016 - £13.4K
    • molerat
    • By molerat 13th Mar 17, 12:07 AM
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    molerat
    Whatever is paid pre 2016 will only bring up to £131.94 leaving another 6 post 2016 to get the full amount.
    www.helpforheroes.org.uk/donations.html
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