National Insurance on Zero Hour Contract

winter100

Hi,
My Wife works as a supply teacher for an agency on a zero hour contract.
She does not work during the school holidays and not by choice some weeks during term times.
Other weeks She will earn around £110 below the National insurance level
Other weeks She will earn up to a maximum of around £450.(not often though)

The issue is that She would like to maintain her National insurance amount to qualify for State pension.
We have phoned HMRC and get advice that she can pay voluntary contributions for the weeks no National Insurance is taken as the annual credit is done on a weekly basis.

The last tax year on a Total income of £7250 She paid £403 in NI but on the HMRC advice she would need to pay a further 33 weeks at £13.90 making £458.70 so a total National Insurance bill of £861.70 on a modest income to get enough for a full years credit for the aged pension.

However if she were to get a full time job where she earned £180 per week She would get an annual income of £9360 and only have to pay a total of £169 National Insurance for the whole year and get a full credit for pension.

She is below the 10 years needed for a part pension and is looking to increase this to 10 years so she can get a pension.as she worked abroad for 20+ years but only has a few years before she reaches pension age.
Does anyone else have any advice.
With Zero hours contracts many people may find themselves short in retirement

NewShadow

Not sure if the numbers add up, but this is the official rates for self employed (zero hours):

https://www.gov.uk/self-employed-national-insurance-rates

You usually pay 2 types of National Insurance if you’re self-employed:

Class 2 if your profits are £5,965 or more a year
Class 4 if your profits are £8,060 or more a year

You work out your profits by deducting your expenses from your self-employed income.

How much you pay

Class 2 £2.80 a week

Class 4 9% on profits between £8,060 and £42,385 2% on profits over £42,385

I assume if your OH earns £7250, and has correctly deducted any expenses, she is due to pay a max of £145.06

Therefore I assume the total pay either isn't an accurate number, wasn't translated in the self assessment form as the right class/type of contributions, or HMRC have processed it wrong.

We don't have the info here to work that out, but it looks that you might be overpaying.

getmore4less

Would moving the pay period to 4weeks/month help?

How is the holiday pay paid?

For weeks that are close to the lower limit use some holiday hours to top it up.

winter100

Thanks for the replies, I have rechecked the figures and I have made a couple of amendments.

to answer a few of the questions.

Her Employment contract shows She is "employed" by the agency.
She has worked during total of 31 weeks.
On 9 of those weeks she earnt below the £111 limit for a credit.
The holiday pay is rolled up into the that rate so unable to add it.
As she is paid weekly the information we got from HMRC is 22 weeks have been paid but She requires another 30 weeks for a years credit. at £13.90 a total of £417.

Update
I again phoned HMRC this morning and have just been given different information.
The guy said that as she has been paid over £5700 over the 22 weeks she would receive a full years credit.

We asked several people over a number of calls before the end of the tax year and they all gave us the same answer that she would have to pay for the extra weeks.
I think I am fairly savvy when it come to finance but navigating the HMRC rules is not always as easy as I think it should be.

Thanks again for the kind replies.

antrobus

winter100 wrote: »

....Update
I again phoned HMRC this morning and have just been given different information.
The guy said that as she has been paid over £5700 over the 22 weeks she would receive a full years credit.

...

According to the Parliamentary Standard Note: SN 3111;

Since April 1978 a qualifying year has meant a tax year in which a person received (or was treated as having received) qualifying earnings of at least 52 times the weekly Lower Earnings Limit set for that year. [SSCBA 1992 section 122]

That is, exactly what HMRC said.