Self Employed but no income

amurphy

National Insurance contributions are NOT voluntary, you do have to pay them however the HMRC MAY decide that you are exempt, its not a given right that just because you earn a lower amount you automatically are exempt. They take into account other things as well.

If you haven’t already done so you will need to complete a CWF1 form to register as a self-employed sole trader. Class 2 NI contributions (which is what you will need to pay) count towards many benefits such as basis state pension, employment support allowance, bereavement etc. If you are only liable to pay Class 2 contributions and you do not pay them you may lose your entitlement to the benefits.

If you do get an exception certificate you can still pay Class 2 contributions VOLUNTARILARY to keep your entitlement to the benefits. THIS IS THE ONLY TIME YOU CAN PAY NI CONTRIBUTIONS VOLUNTARILY.

Paying contributions more then a year late will mean you may have to pay them at a higher rate so make sure you do sort everything out ASAP.

As you are an employee you pay Class 1 earning related contributions however if you are also self-employed in your spare-time then you still need to pay Class 2 contributions.

Just a bit of info regarding state pension - In order to receive your full basis state pension you need 30 qualifying years, however if you are a self-employed contributor you may remain liable to pay Class 2 contributions for the time you are self-employed even if you have the full 30 years.

I have a small business and was not granted an exemption certificate when I first started as they took into account previous earning I had made on another small business I had but then subsequently closed. So please do not think you are automatically granted exemption from paying NI, it is mandatory and not voluntary.

Hope this is of some help to you.

ceeforcat

Just on the thirty years qualification - I have a client who is self employed and has been for 45 years. I spotted that he was not paying Class 2 and it transpired that this had been the case since 1999 when the payments were stopped due to a short period of illness. HMRC still considered him to be 'sick'.

HMRC could only go back six years, albeit at the penalty rate of current contributions. Basically, he did not pay Class 2 NIC for six years, will still receive entitlement with 30 years contributions and there is not a thing HMRC can do about it! Fair system? Still, he is not complaining.

John_Pierpoint

grizzly1911 wrote: »

Does the minimum £2.50 count as a full contribution do you know?

It is cheaper than a voluntary contribution from someone who is (say) early retired but does not have their 30 years of contributions.;)

Mind you you might be doing self assessment for the rest of your life:D

MykMallett

Woah...sorry quite a lot of conflicting advice here...

So I fill in this form and tell them I haven't earnt anything from being self employed and what...? Will I have to hope for a decision that says I don't have to pay NI. I'm paying NI in my current job now of course.