Early-retirement wannabe

mark55man

yep - that's the way the cookie crumbles

I think I am good with the principle, especially the way NI works is if you have several low paying jobs - one of them has to be over the lower limit to earn credit.  For example my OH who did tutoring and part time charity of work would not have earned any contributions.  Therefore a low earning SE person paying lower contributions isn't conning the system just making it work for themselves.  Now if the SE business was obviously fictional I imagine that would already be against the rules - although I'm not sure how actively HMRC would pursue the payments given they are small beer and the true cost us to the DWP a few years down the line

chiefie

The_Doc said:

itm2 said:

"£180.21 is the most you can get. You cannot improve your forecast any more".

So I guess the 35 year rule doesn't apply to me? (i.e. no more NI contribs required)

You cannot improve the forecast, but you may not get what is forecast unless you have the full number of NI contribution years (35). For example, I too was contracted out and my forecast is £175.20. But the estimate based on current NI record is £163.23. It says that I will need 3 more years to get the full forecasted amount.

Hi - I can’t see the last bit you mention and I know I haven’t got enough so far as I recall what the starting amount letter said. Where does it tell you the £163.23 please ?

gadgetmind

shinytop said:

So someone retired but pre-SP age, but a few years short of full SP entitlement could set up a 'business', and then be eligible to top up with class 2 rather than class 3?  Surely not ...

Yes, that's exactly how it works. I have never seen any HMRC scrutiny of whether someone is actually self employed, but this can be as easy as buying some electronic bits in bulk from China and then flogging individually on ebay at typically 2x the price. My wife sold calendars of her own photographs and also licenced some software that I wrote in the 80s (after gifted to her) as her SE income. You then declare this on tax return (yes, you'll need to do one) and offset production/etc. costs, so keep records. At the end, if you don't reach the level where you have to pay Class 2 (or Class 4 for more SE profit) then you get the option to pay it voluntarily. 

Assuming they aren't earning more than personal allowance, they should also be putting £240 a month into a pension, which HMRC adds £60 to each month, and which they can then take back out tax free before SP arrives.

tigerspill

gadgetmind said:

DairyQueen said:
 'Your wife telling HMRC that she is self-employed' (apparently erroneously) smacks of tax evasion at best and mean-spirited avoidance of dues at worst. Judging from your previous posts, you could well afford the measly £780p.a. and there are plenty of other people that really, really need all the help they can get from the public purse.

Nothing illegal or immoral about it. She declares her self-employed income, which is usually a few £100, but was £10k a couple of years ago and she paid tax and Class 4 NI as a result. Of course she then put 80% of it into her SIPP, and got tax relief at 20% that was more than the tax she paid, so it was only the Class 4 that was wasted.

Note that many ex pats declare themselves as self employed and pay Class 2 from outside of the UK. Now that does feel like it's crossed some kind of line to me, but it's widespread and HMRC have never done anything to prevent or discourage it from what I can tell.

So is there a definition of "Self Employed"?
My wife and I have had rental properties.  She is still employed, but can she claim to be self employed ig she has these propertied after the leaves employment?

gadgetmind

tigerspill said:

So is there a definition of "Self Employed"?
My wife and I have had rental properties.  She is still employed, but can she claim to be self employed ig she has these propertied after the leaves employment?

The definition seems to be very vague. My wife has never taken the wee wee but has at times declared < £500 pa in self employed profit. And then paid Class 2.
I can't see how you could not be self employed if running a rental business.
And you can be employed and self-employed at the same time, which my wife has been for 8+ years.

JoeEngland

I'm just about at the end of my first 12 months of retirement and the drawdown figures are in now I've paid this month's credit card bill. Out of an annual budget of 17k we drew only 3.2k from savings. This is partly due to DW still working (she gives me money each month towards bills, and pays for some of the groceries and discretionary spending) and coming under budget for both essentials and discretionary spending. Our house is finally on the market and DW will continue working for a few more months until we eventually move, so 2020/21 savings drain should also come in well below budget.

Unexpected items were 1.6k to re-point the front of the house, and 340 on car rescue and repair. I was going to get rid of my car in November before the MOT and tax is due but we've decided to get rid of it this month before anything else goes wrong. Whereas my car is an old banger, DW has one that's only a few years old.

Even though I retired a couple of years earlier than planned due to a health issue, I'm enjoying a slower pace of life and have time to devote to my hobby of writing magazine articles. The retirement dream will have been properly fulfilled when we move to a more rural part of the country.

shinytop

JoeEngland said:

I'm just about at the end of my first 12 months of retirement and the drawdown figures are in now I've paid this month's credit card bill. Out of an annual budget of 17k we drew only 3.2k from savings. This is partly due to DW still working (she gives me money each month towards bills, and pays for some of the groceries and discretionary spending) and coming under budget for both essentials and discretionary spending. Our house is finally on the market and DW will continue working for a few more months until we eventually move, so 2020/21 savings drain should also come in well below budget.

Unexpected items were 1.6k to re-point the front of the house, and 340 on car rescue and repair. I was going to get rid of my car in November before the MOT and tax is due but we've decided to get rid of it this month before anything else goes wrong. Whereas my car is an old banger, DW has one that's only a few years old.

Even though I retired a couple of years earlier than planned due to a health issue, I'm enjoying a slower pace of life and have time to devote to my hobby of writing magazine articles. The retirement dream will have been properly fulfilled when we move to a more rural part of the country.

We just did that (eventually moved a month ago). Lots to do in the new place - and lots of money to spend!  We knew this though.  We ended up downsizing slightly; we had actually allowed for some slight upsizing so fortunately the money is there.  The long haul travel we won't be doing this year plus the pause on weekends away/eating out has helped too.  Cars can be a bu66er though- we just needed 4 tyres on OH's

You are right in that nothing needs to be rushed now so although we have lots to do we can take our time. 

Good luck with the sale/move.

baz8755

I've always had a make do and mend mentality so lavish expenditure has never been an issue.
My journey started in my 30's when a combination of a flexible mortgage, stoozing and lots of overtime meant I soon became mortgage free. I then started piling all my spare cash into pension/ISAs which admittedly have had mediocre performance.
I had planned to get to 55 and retire/reduce hours but made sure that I had cash reserves that would see me through to that date if the need arises, investing any surplus as the months tick down. Unfortunately events mean that mean that I now may well be retired imminently, luckily all my planning means this should be a minor issue. The far bigger issue is what to do with all the unexpected free time?

NedS

tigerspill said:

So is there a definition of "Self Employed"?
My wife and I have had rental properties.  She is still employed, but can she claim to be self employed ig she has these propertied after the leaves employment?

Yes, you have to be carrying out a recognised trade or profession. Simply being a landlord and collecting rent does not qualify as self employment. You would still complete an annual self assessment but would declare the income as other income rather than earned income from self employment. HMRC are very clear that income from rental properties does not constitute earned income. If you have an accountant, they will also advise you on this.

LeadFarmer

Im beginning to make some plans for early retirement. I'm 48 and will be retiring at 55. Mortgage will be mostly paid off, so from the pension lump sum I get I will be allocating some funds for a reasonable but nice 2nd had car, and maybe upgrade the caravan to a newer one when the time comes. The rest will be saved/invested and it would be nice to be able to help my lad out buying his first house.
Of course, there are 6.5yrs left yet for this plan to go horribly wrong.