National Insurance (Self Employed)

Tony_H_3

Couple of quick questions if I may "Thanks Wifey" firstly regarding NI. I appreciate that I will be paying Rate 2 (£2.10 / week) & Rate 4 (Various %'s), but do I need to pay additional Rate 2 for example to cover the missus.

And second question, Tax. I am married so do I class my personal allowance as the married couples allowance or just the PA £4895

your help & advise appreciated.

Bossyboots

The married couples allowance only applies if one of you are aged 70 or over, so it is just the standard personal allowance.

CIS

Each person pays their own National Insurance, if you wife is self employed with you, she needs to ensure she registers self employed and pays her own NI.

One other point, if you are offered a small earnings exemption from class 2 NI, don't take it. It may seem like its saving you money (allbe it only a couple of pound a week) but whilst the exemption is held, no basic state pension is accrued.

I've dealt with a lot of people who where very disappointed to have held class 2 NI exemptions for yrs and then realised they had not accrued any yr's towards their pension for that time.

Tony_H_3

My wife will not be working, just me. This was why I queried about paying NI for her.

CIS

Does she receive child benefit ?, if so her records being covered by Home Responsibilities Protection, otherwise she'll need to pay class 3 volutary contributions (£7.15 a week or so).

Could she not become a partner ?, split the income and the tax and pay her NI as class 2. It would save you money on the NI, and you would offset tax against two personal allowances.

Tony_H_3

Oh, she receives CB and our daughter is 9. I would imagine the wife will look to return to work at some point in the future so for the time being then there is no requirement to pay NI on her behalf.

CIS

Iam diverging a little from your original question, but,

She would have received HRP from the 6/4 after the daughters d.o.b until 5/4 prior to the 16th birthday. A total of 15yrs.

For each of those yrs that is not already a qulaifying yr through NI, the number of yrs she need for a state pension is reduced by 1.

I assume that your wife was bon after 1955, therfore she needs 44 yrs for a full state pension. If she had 5 yrs of HRP, then she would only need 44 -5 = 39yrs for a full pension.

example: she has 10 qualifying yrs and needs 44yrs. She would get 0 pension as its less than 25% ((100/44)*10) = 23%

she has 10 qualifying yrs and 5 HRP yrs, She need 39 yrs (44-5). She would get a pension as she has ((100/39)*10) = 27%

Qualifying yrs are preferable, but HRP can help bulk up her record.