small earnings exemption and NI credits

jennmark

not sure if this is the right place to post but hoping someone can help! I have been self employed for just over 2 years, when I became self employed I was also employed part time and as my self employed earnings were so small I got a small earnings exemption. I have since taken redundancy from my employment but my self employed earnings remain small (i'm an avon rep and swapped my job for a new baby!). what I need to know is if I need to start paying class 2 contributions? my earnings are still below the threshold for the SEE, I only make about £500 a year from it so the NICs would make quite a dent in it but I don't want to lose my pension entitlement. I was wondering if the fact that I'm claiming child benefit for children under 12 means that I will automatically be given credits, or if because I am earning (all be it very little) I would be expected to make the contributions myself?

vintagebrighton

As you're in receipt of CB you would be credited with your NI contributions for the purposes of your pension. You'd still have to claim exemption from your SE earnings to stop you being billed for NI. You should be aware though that if you need to claim contributory benefits such as ESA or JSA then you wouldn't be entitled as your CB credits don't count for this. You may be entitled to income based benefits. HTH

jennmark

that's very helpful thank you, class 2 contributions don't entitle me to those benefits anyway and theres no way i'm forking out for class 4's!