NI Contributions - Best option

mark55man

Hi - working my way down all the my and OH pensions. Just got one last question (and I know a lot of these have been answered before, I just can't find one that quite matches)

These state pension contribution details are for my OH - currently part time employed with a little SE tutoring (declared to the taxman obviously). Her NI record shows 30 years and we just wanted to check if it worth (or if she was able) to buy some back - as we are expecting a bit of a windfall shortly this calendar year (by end of Dec)

• 2017-18 - Year is not full
• 2016-17 - Year is not full
• 2015-16 - Year is not full

Then Full all the way down to 87-88 and earlier which are partial (vacation work), which currently gives her

• Estimate based on your National Insurance record up to 5 April 2018 £139.31 a week
• Forecast if you contribute another 6 years before 5 April 2030 - £164.35 a week

In these periods her taxable income was-

• FY 18/19 - PAYE = £9k (£200 per week gross whole year ) : SE £3.5K
• FY 17/18 - PAYE = £4K (£150 per week gross 4 months) : SE = £6.5K
• FY 16/17 - PAYE = £0K : SE =£7K
• FY 15/16 - PAYE = £0K : SE =£5K

So I am assuming that OH will have a full year this year leaving 5 years contributions and if I could make up the last 3 years and 19/20, 20/21 that would see her full. Its unlikely after 18/19 that she will be working PAYE but will continue to be self employed at thr £8-10K level.

Grateful for advice on whether and how to top up these contributions in the past, or if this is impossible, how to do so going forward. Cheers!!

p00hsticks

mark88man wrote: »

Its unlikely after 18/19 that she will be working PAYE but will continue to be self employed at thr £8-10K level.

I'm not an expert, but I'd think that if she'll be doing this for at least 5 years going forward and paying Class 2 NI this would be the cheapest way of maximising her state pension.

Although you don't actually say how much it will cost to fill the years 2016-17 and 2017-18 - if it's not much this could be worth doing.

mark88man wrote: »

Grateful for advice on whether and how to top up these contributions in the past, or if this is impossible, how to do so going forward.

If needed (and I'm not sure she does), previous years can be topped up by making a payment to HMRC - you can phone them up and get a reference to make a direct payment transfer. https://www.gov.uk/government/organisations/hm-revenue-customs/contact/national-insurance-enquiries-for-employees-and-individuals


If she doesn't currently pay Class 2 via her self assesssment, details on how to pay going forward are here https://www.gov.uk/pay-class-2-national-insurance

mark55man

I've just done a bit of research prompted by your response (thanks) and I think it will be £150 to buy 2017/2018. I imagine it will be the same to do 2016/2017. But this is not from money paid in rather its a one off charge at point of submission so its a question of paying now or paying later (not missing out on a free year later).



The Self Assessment form (Self Employment section) seems to allow this, so I think this will be OH best route for this year plus a phone call to check about last year (16/17). It's unlikely for caring reasons that she will be in PAYE employment to earn any new ones, so will look to lock them in now and the remainder as early as possible before the rules change again

badmemory

Caring for grandchildren CAN get NI credits as can getting carer's allowance I believe, maybe these would be worth looking at?

mark55man

Thank you - I didn't know that. I suppose in theory with grown up kids that grandchildren are never more than 9 months away - however in practice I think they are a way off.


Also my DS needs caring for, but not in a way that anyone will pay for, and god knows we railed against the machine hard enough

Dazed_and_confused

FY 17/18 - PAYE = £4K (£150 per week gross 4 months) : SE = £6.5K
FY 16/17 - PAYE = £0K : SE =£7K

With the level of profits you have quoted how has she avoided paying Class 2 National Insurance in the first place???

mark55man

That is a good point. I did raise a thread on it, a couple of years ago and got told off good and proper. All the pages on self employment and all the quizzes on are you SE or not are couched in terms of full time self employed "traditional" jobs. Not just doing a couple of hours tutoring 4 days a week. OH always declared it to HMRC in the comments but not on the SE pages. OH has now gone back to those forms and resubmitted on a SE basis for 16/17 and 17/18.


A bit lame perhaps but we were both so PAYE / full time focussed that it took a while to click. Then a lot of waiting around and procrastinating till the end of the tax year - but done now - thank you

Dazed_and_confused

OH has now gone back to those forms and resubmitted on a SE basis for 16/17 and 17/18.

Do you really mean in the "comments"" (white space box)?

If so she presuambly won't have paid any tax on it as she hasn't properly declared the income.

Probably worth it if it allows payment of Class 2 National Insurance but if you are married and she has also applied for Marriage Allowance she may also now end up with a tax bill for 2017:18 although it wouldn't seem to affect 2016:17.

planteria

agreed, i'd have thought she will get a tax/NI bill... but in the process perhaps the contributions for State Pension will be made up:D

mark55man

Dazed_and_confused wrote: »

Do you really mean in the "comments"" (white space box)?

If so she presuambly won't have paid any tax on it as she hasn't properly declared the income.

Probably worth it if it allows payment of Class 2 National Insurance but if you are married and she has also applied for Marriage Allowance she may also now end up with a tax bill for 2017:18 although it wouldn't seem to affect 2016:17.

Yes pretty much this was the state of affairs - we used the comments box as we thought that was for comments. However, we weren't particularly worried as she was under the basic rate threshold with all things added in so there was no tax to pay.


However, being older AND wiser (doesn't always happen) OH is now backdated using the self assessment Self employment pages to 2016/2017 (which allowed the payment of Class II) and in addition used her new personal tax account to raise the earlier non recognition of revenue against the relevant tax years. So the revenue are now well and truly informed, and I will update in a month or so when it has all percolated through the system.


PS didn't claim the marriage allowance as I am a HR taxpayer so wasn't eligable