Voluntary Class 2 NICs - to pay or not to pay?

sixgeese

Another tax return point - this relates to class 2 NICs.

If I am mostly paid through PAYE with a minority of my income coming through self employment, will I already have made sufficient NI contributions through my salary, or should I answer 'yes' to the question about making class 2 NICs voluntarily?

If this a completely 'up to you' thing?

Obviously makes a difference to my tax bill but despite reading up on it, I'm unclear on what I'm gaining or risking by answering yes or no.

uknick

Were your self employed profits greater than the class 2 threshold of £5,965 in 2015-16?

If so, you have no choice but to pay them.

If they weren't, did you earn more than £8,060 during the year and pay NI from your pay packet each pay period? If you did, you will have made enough payments to be eligible for any of the related benefits, i.e. state pension years.

kinger101

Just to add, the interaction of the new state pension rules are quite complicated.

https://www.gov.uk/new-state-pension

What you might get in return for the one year's voluntary contributions is £4.55 a week for the rest of your life (on reaching state pension age, index linked). But that's a best case scenario. It's also possible it will be worthless if for example you already have the full 35 years or something better based on the old calculation.

Would be very difficult to calculate the actual amount without going into the nitty gritty of your employment and NIC history. The government will calculate your current entitlement for you if you provide the relevant details;

https://www.gov.uk/check-state-pension

TheCyclingProgrammer

uknick wrote: »

Were your self employed profits greater than the class 2 threshold of £5,965 in 2015-16?

If so, you have no choice but to pay them.

If they weren't, did you earn more than £8,060 during the year and pay NI from your pay packet each pay period? If you did, you will have made enough payments to be eligible for any of the related benefits, i.e. state pension years.

Wouldn't they have only needed to be paid over the LEL to get a qualifying year?

uknick

TheCyclingProgrammer wrote: »

Wouldn't they have only needed to be paid over the LEL to get a qualifying year?

Good point.

sixgeese

uknick wrote: »

Were your self employed profits greater than the class 2 threshold of £5,965 in 2015-16?

No, my SE profits were around £4K.

If they weren't, did you earn more than £8,060 during the year and pay NI from your pay packet each pay period? If you did, you will have made enough payments to be eligible for any of the related benefits, i.e. state pension years.

Yes - a lot more than that so I can assume my employer would have taken off the right amount of NI? This doesn't seem to be documented on payslips (unless it's bundled in with other tax) so I just wasn't sure how to tell what I'd already paid through my salary.

uknick

sixgeese wrote: »

No, my SE profits were around £4K.



Yes - a lot more than that so I can assume my employer would have taken off the right amount of NI? This doesn't seem to be documented on payslips (unless it's bundled in with other tax) so I just wasn't sure how to tell what I'd already paid through my salary.

Your payslip must show what the deductions are for. I've never come across a company that doesn't split out the NI and income tax elements when paid.

If you're unsure about how much NI you've paid try this link;

https://www.gov.uk/check-national-insurance-record

sixgeese

uknick wrote: »

Your payslip must show what the deductions are for. I've never come across a company that doesn't split out the NI and income tax elements when paid.

You're right of course - I was looking at my P60 not a payslip.

NI is clearly labelled on there and I'm paying a few hundred a month in 'National Ins' so I guess I'm probably covered?