State Pension missing years

cns06

As I am now getting closer to (early) retirement I thought I had better log into my SP and check everything is ok. I have been paying since I was 16 so I assumed (yeah you can stop laughing at the back now) I should have at least 25 ish years contributions.


However, after logging in I only have 14... the last 10 years are "not filled".


Erm, ok. So I called up HMRC and they said that they had no record of me paying any NIC so I can either back pay the last 6 years to take me to 20 years or do nothing and get a lower SP.


Now, about 10 years ago I started self employment via my LTD company. We put an accountant in place from the start and he has been handling all tax and NIC etc since. My income has generally been just under the personal allowance. The rest of my "income" has been made up from divs and pension (SIPP) contributions.


Normally I would call my accountant but he is not working at the moment due to personal reasons and I don't want to disturb him. So can anyone offer any advice? Even though I have been working I assume its looking like I will have to make up at least £4k of contributions to get me back to the last 6 years?


I spoke to HMRC and they did not really seem to understand the question.

Marcon

You weren't self-employed if you were an employee of your limited company. Sounds as if you followed the classic model of taking a modest salary, but one which should have been high enough to trigger an NI credit without actually paying NI. Which years are missing - do the correlate with those where you were running your limited company? If so, I think you do need to talk to your accountant once he is back in harness, if he ran the payroll side of things. You need to check that he did indeed register the company for PAYE so you could be an employee and thus get the NI credit.

cns06

I am missing the years from when we started the LTD till last year. This year says full though which is odd.

Dazed_and_confused

My income has generally been just under the personal allowance.

"Just" under would currently mean some National Insurance would be payable. Or by "just" do you mean a few thousand under?

What does each years P60 show?

Have you tried looking at your personal tax account to see what information is showing up as having been submitted by your employer?

Do you get payslips showing the salary payments you have been receiving?

This year says full though which is odd

It is given we aren't even half way through the (tax) year yet!

atush

What does your idiot accountant say?

It was his job to structure and pay your NI and that of your employees.

does he have professional insurance to cover his cockups?

drumtochty

Sorry but this is not the first story I have heard of an accountant not running a PAYE account for limited company directors.


A friend has a limited company and has run it via his accountant (as he is an expert) for two years. In year one the accountant did not set up an account via HMRC to run PAYE and he got no NI credit that year even turning over circa £12k, one director only. I would have done 8k via PAYE and £2k to a pension via the company and £2k expenses which he had reciepts for.


Therefore no paye tax and a NI credit year one.


Not at all the company paid £2k corporation tax. I blew my top at this.



I shouted at the friend and made him set up a PAYE account and under sufferance he put through a salary of £8k or so. That was 2017 2018 tax year.



He got his credit for 17/18 a few months ago.


He has now put his books for the year ending April 2018 into his accountant and the accountant said to him "who told you to do that trick and get a years NI credit for free".


I had a similar lack of joined up thinking with an accountant some years ago.

greenglide

When I was a contractor some years ago I did the payroll myself so I knew it was correct. The same applies to invoicing, VAT etc.


Ultimately the director(s) are responsible for all this. The accountant did the accounts and I signed them off. I only saw him about twice a year and his charge was minimal as there was so little work to do.


Most of his customers were self employed rather than limited companies though.


Of course some people with limited companies will not have the abilites to do this and others may not have the time or inclination to do this.

Lrimas

Ouch - you really need to speak to your accountant (or check that you have a payroll set up in your accounting software). Mine recommended that I pay myself just under the threshold for NI contributions but assured me I will still get my NI year. I've had confirmation from a few people that it's fine but I'm still uncomfortable so will check once the financial year is over.

If your company still has funding available can you continue to pay yourself a salary instead of closing it down for entrepreneur's relief? You should be able to save a bit on the tax and will then accrue more years.

cns06

So it looks like something has gone amiss with HMRC as our PAYE income has always been above the lower threshold for NI credit (or whatever its called) and everything else looks ok so he is drawing me up the last 10 years of data and I will forward that on and hopefully they can update the system.

DairyQueen

We have recently established the same business model: i.e. limited company with director taking salary just sufficient to receive a NI credit.

When contacted, HMRC refused to confirm that we would need to run payroll in order to notify HMRC/DWP of the eligibility for the NI credit. However, common sense suggests that, minus any HMRC psychics, running payroll is the only available method. We are therefore running payroll even though there will be no personal income tax due for the only director who will be paid any salary.

Questions for your accountant are therefore:
1) Is s/he running payroll for the company? If so, HMRC should have been aware of the NI credit.
2) If "no" then how has s/he be making HMRC aware of your eligibility for NI credits?

drumtochty

I accept that it is the Directors of the Limited Company who are responsible for the running of the company and these days I do all my Limited Company accounts and put in the company books to HMRC myself via their limited company CT600 portal.


I no longer use an accountant.


I am one of the few people who do that and at times it can be challenging to get your head round things re HMRC year end reporting. It is not for a normal human being I am afraid.



Out of interest I spoke to someone else who is still running a limited company and is taking his state pension since September 2017.


His accountant did not run a PAYE system for him or get him to run such an account with HMRC in the last 10 years and they paid each director just over £7k dividends each year for say 8 years they could have got NI credits. He has a state pension of circa £148 per week.


If the acountant had run a PAYE account or told them to do it, his state pension for instance would be nearer £160 to £165 per week as he would have got SSP until 2016 without paying any NI contributions as he was below the £8k or so limit.


He boasted to me that his accountatnt had fixed it so that they did not pay any NI in those years.


I did not advise him of his loss of state pension SSP as that would not help the situation and he still thinks that he beat HMRC by not paying HMRC NI contributions.


I rest my case.