Self employed - totally clueless re. pensions - please help

SillySSausage

Hi,

I'm 38 in April. Single Mum to a preschool so get tax credits to help out

jamesd

The person receiving child benefit continues to get them regardless of whether they are working or not, so no maternity leave issue there. The self-employed sole traders don't get other maternity leave payments.

SillySSausage

Many thanks.

So, I'll cancel my NI contributions then, then try paying in to a pension scheme? Jees, if I had enough money I'd hire a financial adviser! Thanks

jamesd

Ok, not close to 55 so the potential benefits of paying money into a pension then taking it out soon after don't apply to you.

So far as help with childcare goes, if you're getting tax credits you probably already know about it but just to be sure please check tax-free childcare and Free childcare and education for 2 to 4-year-olds as well as the MSE article that you may have already read. Looks as though you probably know those things but checking beats missing something.

It's also worth knowing that pension contributions normally reduce the income used for means tested benefits. What this can mean is that you might be able to get much of the cost back in higher means tested benefits, if you're eligible for those. The exact rules depend on the specific benefit.

Seems a though you'd be eligible for a council tax single person discount as well unless you're living with another adult. Again, you probably know, just being sure.

SillySSausage

Thanks jamesd!!

Yes I have single occupancy council tax as it's just my 4y/o and me.

So, if I pay in to a pension each month I should let tax credit people know?

I'm about to take the plunge and stop my NI contributions, not sure why....but worried about doing this!

Cheers

jamesd

Yes, let the tax credit people know and I expect that you'll get more money from them as a result. Please do let us know how you get on, the potential cost of pension contributions can be much lower when means tested benefits go up as a result. I've seen suggestions that sometimes the net cost can be as low as 20% of what ends up in the pension.

You'll be fine on the NI. Plenty of time to get to the total of 35 years that you need and for now your child benefit will do it nicely for you.