Not entitled to a penny!

Oldernotwiser

Welshwoofs wrote: »

Oh don't get me wrong, I don't have any problem with the theory behind what you're saying. What I mean is what when you sign up to be self-employed there really is no explanation that you're paying a lower rate if NI and that if you have no work there'll be no benefits. It should be transparent with an option to pay a higher rate so that one qualifies for benefits if times are hard.

Obviously I don't know what information there was in the past but https://www.direct.gov.uk has the following information at the moment, which seems pretty straightforward.

"Benefits that depend on NICs
Your entitlement to the following benefits and/or the amount you can get will depend on your (or in some cases your spouse or civil partner's) NICs:
contribution-based Jobseeker's Allowance (Class 1 NICs only)
Incapacity Benefit (if you can't work for long periods due to illness or injury)
contribution-based Employment and Support Allowance (ESA)
State Pension
additional State Pension (Class 1 NICs only)
Widowed Parents' Allowance
Bereavement Allowance
Bereavement Payment"

dookar

Welshwoofs wrote: »

Oh don't get me wrong, I don't have any problem with the theory behind what you're saying. What I mean is what when you sign up to be self-employed there really is no explanation that you're paying a lower rate if NI and that if you have no work there'll be no benefits. It should be transparent with an option to pay a higher rate so that one qualifies for benefits if times are hard.

But who should offer this explanation? Every single opportunity of a self employed nature advertised by the jobcentre informs potential applicants that it could adversely affect benefit entitlement and advises them to speak to an advisor.

Surely there's a need for people to take a little personal responsibitilty and do a little research before making such a decision.

cuddlymarm

Hi

When you are choosing to go self employed ( or indeed getting a job) you don't automatically think that things are going to go badly for you. Even the governments didn't know this recession was going to happen and if everyone thought of the worst case senario of every job they applied for then everyone would be on benefits. You have to believe you are going to suceed and just try your best.

Cuddles:rotfl:

MrCarrot

Personally I think the tax system is far too complex. NI is seperate to income tax and there are all different levels, when in reality NI is just tax and no different to all the others.

I was self employed for many years and am now the director of a limited company. I really don't know the full picture but I strongly suspect that if I was out of work, I would also not get a penny in benefits. I admit I probably pay less tax than if I was a normal employee, but I still contribute thousands of pounds a year to the system, not to mention I have accountant's fees since my tax affairs are so complex, I employ people (who also pay tax), etc.

If I asked my accountant or job centre about what would happen with regards to benefits *if* I found myself unemployed, I suspect I wouldn't get a straight answer. It's one of those bridges which you don't really cross until you come to it, and let's be honest that attitude stems from the fact it's all so complicated.

busterian

I had my Limited company for 4 years and although I was a Director, I paid myself as an employee - therefore PAYE and NIC was paid through the payroll.

When you are self employed you can choose to pay voluntary contributions and the Government advise this.

Welshwoofs

dookar wrote: »

But who should offer this explanation? Every single opportunity of a self employed nature advertised by the jobcentre informs potential applicants that it could adversely affect benefit entitlement and advises them to speak to an advisor.

Surely there's a need for people to take a little personal responsibitilty and do a little research before making such a decision.

Well I can only talk about my OH's case. In his situation he phoned the tax office and stated he was going self-employed and was told he'd then submit yearly tax returns. He got letters asking for £x in NI contributions and paid those. He didn't realise there were different 'classes' of NI and it obviously didn't occur to him to check in case there were different levels of NI payment. I'd never heard of different levels of NI either, I've always been employed by other people so such a thing never crossed my mind.

That oversight means that, despite paying NI, when he had no work he was not entitled to anything. Ok fine, if those are the rules those are the rules and I guess that had it not been for me, he'd have starved and become homeless. But I would have to say that, if those are the rules, why are people who have never contributed to NI entitled to JSA which I believe is the case with people coming out of full time education?

As for who should inform self-employed people....well the first time they receive a letter stating the amount of NI contributions they owe, why couldn't that same letter state that the level being paid entitles them to X, Y and Z but that they can voluntarily pay a higher level which entitles them to A, B or C. Do self-employed people even have the option to pay a higher rate of NI in order to get some basic safety net if their work disappears?

Oldernotwiser

Welshwoofs wrote: »

Well I can only talk about my OH's case. In his situation he phoned the tax office and stated he was going self-employed and was told he'd then submit yearly tax returns. He got letters asking for £x in NI contributions and paid those. He didn't realise there were different 'classes' of NI and it obviously didn't occur to him to check in case there were different levels of NI payment. I'd never heard of different levels of NI either, I've always been employed by other people so such a thing never crossed my mind.

Please don't take this the wrong way but surely when he saw that he was paying such a small amount of NICs (is it £2.50?) ONE OR OTHER OF YOU MUST HAVE REALISED THAT THIS WAS DIFFERENT FROM THE 9%(?) THAT SOMEONE EMPLOYED PAID? (Sorry about the caps!)

You don't need to know that much about "different levels" to realise that your NICs have gone down from, say, £30 per week to £2.50!

Welshwoofs

Oldernotwiser wrote: »

Please don't take this the wrong way but surely when he saw that he was paying such a small amount of NICs (is it £2.50?) ONE OR OTHER OF YOU MUST HAVE REALISED THAT THIS WAS DIFFERENT FROM THE 9%(?) THAT SOMEONE EMPLOYED PAID? (Sorry about the caps!)

Well I fully admit I am a total dunce with taxes...I've never had to work them out. All I know is that I pay around £355 a month, which seems rather a lot considering I have private health and pay into a private pension. The last NI request he had was for around £200 from memory and I had to pay it for him as he'd not even made that amount in that tax year.

Again though, I do find it odd that a self-employed person can contribute to NI (even if it's a lower rate) and receive absolutely no benefits whatsoever, whereas someone who's never worked can. That makes no sense whatsoever and doesn't appear to be fair.

I'm not moaning about my OH's case I'll hasten to add, but about the inconsistencies of the system. In our case I'd rather he did what he did and live off me until he got other work than go through the awfullness of benefits applications

p00hsticks

Welshwoofs wrote: »

Again though, I do find it odd that a self-employed person can contribute to NI (even if it's a lower rate) and receive absolutely no benefits whatsoever

That's not true though - class 2 contributions are counted towards incapacity benefit, maternity allowance, state pension and various bereavement benefits.

http://www.hmrc.gov.uk/nic/class2.htm

Welshwoofs

p00hsticks wrote: »

That's not true though - class 2 contributions are counted towards incapacity benefit, maternity allowance, state pension and various bereavement benefits.

http://www.hmrc.gov.uk/nic/class2.htm

None of those however are much use if you are an able-bodied male who is simply getting no work in.

Unfortunately in this recession I know of a few chaps who were self-employed in the trades and have gone under spectacularly and have had to survive whilst finding work with no money coming in. What on earth are they expected to do if they have no wife/partner/parents to prop them up whilst finding work?

Again, why is it that someone who has never worked (and therefore never paid any NI) can claim JSA, but a self-employed person who has worked and contributed to NI cannot? That is not a fair system. I fully advocate withholding JSA from able bodied people who've not contributed enough NI....but I think it should be applied to everyone not a select few. In short, they are penalising enterprise and rewarding laziness.