Carers Allowance, self employment and NIC exemption

Jaycee_Dove

I wonder if anyone can offer any help, please.

I have been self employed as an author for many years and have already got 39 years of NIC payments built up - so well beyond the 30 necessary prior to my retirement date due next year (at age 61 and a bit).

I became a carer in 2004 and as a result of this had to give up writing my books and going out on promotional tours and doing paid lectures because I now have to be present round the clock at home in my carer's role. But I was still able to do the occasional thing, such as update old books or write articles, and my books still in print continued to earn me a little money.

As such I did not claim carer's allowance and continued paying my Class 2 stamps by direct debit.

Three years ago, as part of an annual review by the care authorities and social workers who help us here, and were arranging to fit a tracker hoist, I was advised that I should be claiming carer's allowance because my income had inevitably fallen year on year now that I was no longer engaged in my primary work of writing books.

It had probably been below the earnings limit to qualify for a while but I still thought of myself as self employed given that I was finding an hour or two a day between care tasks to earn a little via writing. So I had not dreamt of claiming benefits.

Anyhow, at their suggestion, I explained the circumstances to the relevant authorities, filled the forms accurately, the claim was accepted and I started to be paid. I was told that I would no longer need to pay class 2 NIC and my direct debit for this duly stopped.

I have filled out a self employment assessment tax form each year as usual since then and included all income - including, of course, carer's allowance, being aware that this was taxable. As expected my annual income has remained too low to pay tax.

I have not had any letters from the NIC people in the two - three years since - until a few weeks ago when I was sent a bill for 6 months NIC payments.

I phoned them up and was kept on the phone for nearly an hour being passed from one person to another explaining over and over the above. They kept saying that if I was on carer's allowance my NIC payments were not automatically stopped (I was told otherwise by the social worker in 2009, the carer's allowance data sheets seem to agree and they have stopped for the last 2 - 3 years without any requests to pay them from Newcastle).

Again I explained all this and they said I had probably just 'mislaid' the last 5 or 6 letters from them claiming previous payments or maybe they had all got lost in the post as they 'must have been sent'. I said this did not add up and I knew I had had no previous letters because I keep a close watch on official letters as we get plenty of them here.

Finally I was told that I had to put it all in writing as they could not deal with this issue over the phone.

So I did. And now several weeks later have received a letter saying 'Thank you for telling us that you have stopped being self employed'. Adding that 'in the meantime we have suspended your arrangements to pay NICs by direct debit.' I was also asked to sign a declaration as to exactly 'when I stopped being self employed permanently' and if I wanted to reclaim any payments since I had ceased.

This is all confusing because:

(1) They appear to have suspended the arrangements for direct debit three years ago and not just now.

(2) I have not really stopped being self employed and income from my old books and from other sources, such as library loans, will continue being paid to me for some years.

So I am really asking whether I am misunderstanding something here? Or do I simply have to say that I am no longer self employed and carry on with self assessment and just put my income from my writing under some other heading?

xylophone

http://www.direct.gov.uk/en/CaringForSomeone/MoneyMatters/DG_10012529
"For each week you receive Carer's Allowance you will normally get a National Insurance (NI) contribution added to your NI record up to the tax year in which you reach State Pension age (unless you are a woman who has chosen to pay reduced rate NI contributions)".

Jaycee_Dove

Thanks, Xylophone, that concurs with what I was told and what everything I have read has suggested.

Just not sure how I am supposed to fill in this form. As far as I can see I am still self employed - given that I am still gaining some income from that source?

So I could give the date when I started to receive Carer's Allowance - but I would feel like I was not being accurate if I did that.

There just seems to be a large disconnect here between the NIC contributions office in Newcastle and the other departments dealing with carer's allowance and my annual tax returns.

Do they not communicate at all?

Jaycee_Dove

Just to update this thread and seek more help - if anyone has suggestions please.

I contacted the tax office to whom I submit my annual returns. They confirmed that my income has been falling year on year as my royalties from books that were written before I became a full time carer get less every year and I am not writing any new ones. Hence I have been below the tax threshold for the last 3 years.

I need to continue submitting self employed tax forms so should not send a form to the NI office as they requested saying that I had stopped being self employed as that was untrue.

They suggested there was often a delay between departments in passing on confirmation of receipt of carer's allowance for the past 12 months. So the NI department in Newcastle were probably just behind on this for 2011/12 and once they got the data then the system would catch up.

Well, today I got a final demand letter for the past 18 months NI contributions via Newcastle advising that my benefits will be effected and they will take me to court unless I now pay up.

I cannot see what I have been doing wrong here. I have been receiving carer's allowance for 2 years longer than the period they claim I have not paid any class 2 payments. So the first two years credits after THEY stopped my monthly direct debits when I first started receiving carer's allowance must have been accepted by them or I would be getting billed for these as well.

Can anyone suggest who I should be talking to here - as the NI office say my file is closed to any phone discussion and unless I tell them via form CF 10 that I have stopped being self employed then the bill stands.

But my local tax office say I cannot do this because I am still self employed so would be submitting false information and I am being credited because of carer's allowance.

Yet the NI office appear to not accept this fact on my say so.

So who on Earth can I ask to actually provide the NI office with the evidence of these credits?

My retirement date is in May 2013 and I have checked by getting a statement of how this stands and that confirms full pension entitelement and 39 years of NI contributions.

For there to be that many NI years then the last 4 years or so of class 2 during my receipt of carer's allowance seem to be recorded.

So any ideas about how I can get these departments to talk to one another and sort this out would be really appreciated. Thanks.

anmarj

The way I see it is that you get carers allowance and credits towards your state pension but you still have to pay class 2 conts on the self employment, unless you have applied for an earnings exemption certificate to stop paying class 2 conts on that. In a way it is like me, i work full time and pay class 1 as an employee but I also have a small business registered as self employed, I would still have to pay class 2 even though I pay through my paid employment. The only reason I am not doing so is because, I have that certificate. Sounds like the social worker in 2009 did not know what they were talking about, as for the delay in contacting you about the class 2, can't help on that front.

The ca is taxable benefit, so is this been submitted on your tax return?

sleepless_saver

Agree with anmarj.

If your self employed income is below the threshhold where you have to pay Class 2 contributions - currently £5595, then you should complete the CF10 form which is the small earnings exception form (it's not for saying you've stopped self employment which is what your post says). Get it here: http://www.hmrc.gov.uk/forms/cf10.pdf

Send it with a letter explaining that because you were receiving carers allowance and associated NI credits, you did not realise you might have a class 2 liability from your self employment the years after you started getting carers allowance. Ask for the small earnings exception to be made retrospective for those years (assuming your earnings fell below the threshhold ). And ask (nicely because they don't have to do this) for any penalties and demands for back NI payments to be cancelled.

Good luck!

Jaycee_Dove

Thank you. I can see what you are saying. And, yes, I have always included carer's allowance in my tax return income as I realised it was taxable. And, yes, even with that included, my income has been well under £5000 pa for the past 3-4 years.

I did not know you had to still pay Class 2 when receiving Carer's Allowance. Nobody ever suggested that.

I did not cancel my direct debit through which I was paying this monthly for years prior to being granted Carer's Allowance. Someone in authority did so, telling me I was being credited with the stamp.

The government leaflet I was sent to read - unless it is well hidden - says nothing to indicate thqt you should still pay class 2. It just says you are credited for your NI stamp for the years you receive CA.

I had also been assured over the phone earlier this year that I had been tax credited for the years that I was getting CA, and as I had no NIC payment request sent to me until a few months ago (and even now they say I only owe for the past 18 months and not for the previous two years before that when I was getting CA and I had not paid class 2 either) then I had no reason to think differently.

I will fill out one of these forms and hope that resolves matters but this seems to highlight an oversight in all the government information on Carer's Allowance and NIC credit.

Because I had - I think reasonably - assumed that getting a credit was the same thing as not needing to pay....especially given that you cannot be awarded CA unless you prove that you earn below the level of income per week that means you do not need to pay Class 2 stamps.

But much appreciation to you both. I will politely submit the form.

sleepless_saver

I have had another look at this, and the advice I gave yesterday was wrong. Sorry about that, I thought it would be similar to the position where someone is both employed and self employed and has to pay NI for both.

However, you can see from this HMRC link http://www.hmrc.gov.uk/manuals/dmbmanual/dmbm525520.htm that you should be exempt from the Class 2 NI contributions because you are in receipt of carers allowance.

I suggest writing to HMRC with print of their guidance and ask them to look at your case again as you have been receiving carers allowance.

CA_Man

C A pays a class 1 contribution so you shouldn't need to continue to pay class 2. Often when someone pays both but their earnings are assessed as under the statutory limit for CA, a file is submitted to Newcastle to arrange for a refund of the class 2 contributions. If you are still receiving money from S/E then it hasn't ended and should be declared to the CA Unit who would request yearly accounts

Jaycee_Dove

Thanks for all the advice and the helpful link to the leaflet. This matches what I was told and what I read in the leaflet sent to me when I first started to get CA about 3 - 4 years ago.

Hence my confusion over the requests for payment.

I will talk to everyone I can tomorrow and submit the linked document above in writing as suggested.

Will report back when I know more.

sleepless_saver

CA_Man wrote: »

C A pays a class 1 contribution so you shouldn't need to continue to pay class 2. Often when someone pays both but their earnings are assessed as under the statutory limit for CA, a file is submitted to Newcastle to arrange for a refund of the class 2 contributions. If you are still receiving money from S/E then it hasn't ended and should be declared to the CA Unit who would request yearly accounts

I thought carers allowance got Class 3. http://www.turn2us.org.uk/information__resources/benefits/carers/carers_credit.aspx .