Class-2 NI as an investor

PhaseThree

The HMRC web site states that you can make voluntary Class-2 contributions if you are :-
"people who make investments for themselves or others - but not as a business and without getting a fee or commission".

This pretty much describes my current financial situation - retired early and living off investments until i'm 65. Unfortunately there seems to be close to zero information as to how this rule is applied, how you are supposed to register or how you get to pay contributions.

Has anyone else tried this route ?

Dazed_and_confused

Does this help?

https://www.gov.uk/hmrc-internal-manuals/national-insurance-manual/nim74250

Not sure quite how necessary this route is now with the advent of the "Trading Allowance".

PhaseThree

Many Thanks - exactly the sort of information I was looking for.

The "Trading Allowance" is new to me (I have been fully PAYE for the last 35 years). From a quick Google it seems that as a sole trader with a trading income of less than £1000 p.a I dont need to tell HMRC. How does this help me with Class2 NI ?

Dazed_and_confused

You don't need to tell HMRC.

But you might choose to tell HMRC.

Have a look at the 2018:19 Self Assessment return and accompanying notes on gov.uk. In particular the SA150 notes booklet.

Trading Income Allowance
If your combined receipts from self-employment
(excluding Rent-a-Room trades) and certain
miscellaneous income (read page TRG 8, Box 17
Other taxable income) are no more than £1,000
they are exempt from tax and do not need to be
reported on a tax return unless the receipts are from a connected party.

This new allowance applies to any receipts that would otherwise be included on your tax return for the year ended 5 April 2019.

If your income is no more than £1,000, you may
choose to complete the ‘Self-employment’ pages if:
• your allowable expenses are higher than your
turnover and you want to claim relief for the
loss or carry forward a loss to be used against
future profits
• you expect your turnover to exceed £1,000 in
the next tax year
• you want to voluntarily pay Class 2 National
Insurance Contributions to build entitlement to
contributory benefits like the State Pension
• you want to preserve your record of
self-employment, for example to support an
application for Maternity Allowance
• you would like to claim Tax Free Childcare
based on your self-employment income
• you’re a subcontractor and want to claim back
tax deducted under the Construction Industry
Scheme (CIS)