Early retirement, small-time self-employment and voluntary NI contribs

itm2

I took early retirement last summer, aged 53. I plan to start drawdown on my SIPP next April (I turn 55 on April 6th). Since I only have 27 qualifying years towards my state pension I want to make voluntary contributions to build up my entitlement to the full 35 years before state retirement age.
Since retiring I have done a small amount of work as a local IT consultant - about £250 in fees since last summer, so nothing major. My question is whether I should declare myself as self-employed to HMRC for the current tax year, even though my earnings are unlikely to put me into the lower tax bracket (even taking into account the SIPP income), and whether doing so would help in any way with my voluntary NI contributions?
The main downside of this option would be (presumably) the need to hire an accountant to prepare annual accounts - unless there's a simple option for someone in my position which doesn't require specialist accountancy expertise?
If I don't declare myself as self-employed I believe that I have the option of paying around £13/week to HMRC to maintain my state pension entitlement for the year. Is this something that can be paid as a lump sum at the end of the tax year?
Any views/suggestions regarding my options would be much appreciated.

kidmugsy

itm2 wrote: »

I have done a small amount of work as a local IT consultant - about £250 in fees since last summer, so nothing major. My question is whether I should declare myself as self-employed to HMRC for the current tax year... and whether doing so would help in any way with my voluntary NI contributions?
The main downside of this option would be (presumably) the need to hire an accountant to prepare annual accounts

Yes, tell them you also have a self-employed income.

Arrange with the DWP to pay the self-employed NIC at the low rate for someone earning less than the something-or-other limit. Far cheaper than what you are currently doing.

No - no need for an accountant - you just complete your income tax return online - trivially easy.

Neasy

Some information here http://www.hmrc.gov.uk/working/intro/selfemployed.htm

I was self-employed a few years ago and did my own accounts; it was perfectly doable.

Best of luck,

Neasy

itm2

Thanks for the feedback. It seems like registering as self-employed is the way to go. I'll read up further on the requirements for record-keeping - I'm hoping to get away with a simple income and expenses register (no P&L, Balance Sheet, etc).

kidmugsy

itm2 wrote: »

I'll read up further on the requirements for record-keeping - I'm hoping to get away with a simple income and expenses register (no P&L, Balance Sheet, etc).

While my wife has been doing this we've simply kept what we grandly refer to as a Schedule of Income and Expenses: the latter is mileage and telephone bill. We don't charge for the use of a room as an office because this seems capable of opening a can of worms on Capital Gains Tax if we were to sell the house - not worth the risk for what would be trivial sums in income tax. We are, however, going to find out about capital allowances on buying a new computer. (Anyone know anything about this?)

gadgetmind

My wife also goes the self employed and class 2 route, and she also does her own online self-assessment. Dead easy!

SeekTruth

itm2 wrote: »

.... Since I only have 27 qualifying years towards my state pension I want to make voluntary contributions to build up my entitlement to the full 35 years before state retirement age.....

There is nothing 'magic' about 35. Some will receive a full Single Tier Pension with fewer than 35 years of entitlement, others will need more than 35 years - see Myth No. 2 on https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/181237/single-tier-pension-fact-sheet.pdf