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State pension and self-employed

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Comments

  • Marcon
    Marcon Posts: 15,868 Forumite
    Ninth Anniversary 10,000 Posts Name Dropper Combo Breaker
    freebetsfreetips wrote: »
    OK, I suppose I'm not technically self-employed.

    I know other people pay the £719 figure or similar but I think since the government introduced the £2000 employment allowance (https://www.gov.uk/government/publications/national-insurance-2000-employment-allowance) it is slightly better to pay a higher figure and also pay some employees NI? That's what our payroll person says anyway!

    Ask them precisely why they say that. It's nonsense.
    Googling on your question might have been both quicker and easier, if you're only after simple facts rather than opinions!  
  • freebetsfreetips
    freebetsfreetips Posts: 48 Forumite
    I've managed to get access to the HMRC thing. Seems they've improved their website from the black hole it was last time I used it!

    I've got 20 full years so all good. I'm going to be rich!

    Thanks all.
  • Prism
    Prism Posts: 3,861 Forumite
    Eighth Anniversary 1,000 Posts Name Dropper
    Marcon wrote: »
    Ask them precisely why they say that. It's nonsense.

    Why do you say that? I used to use the same system until I was no longer eligible
  • dunstonh
    dunstonh Posts: 121,215 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    Some accountants pay a salary to the personal allowance. Some do it to the primary threshold. The primary threshold method is the dominant one and it still the most tax efficient. Although the gap is not what it once was.
    I was always told that even though we weren't paying NI we were still entitled to the state pension. Is that definitely correct?

    As long as you pay to the Primary Threshold, you qualify as if you have paid NI despite you not paying NI.
    We currently pay a salary of £1041pm plus a quarterly dividend.

    That is way above the primary threshold. That is an amount to the presonal allowance and would see you pay NI.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • Prism
    Prism Posts: 3,861 Forumite
    Eighth Anniversary 1,000 Posts Name Dropper
    dunstonh wrote: »
    That is way above the primary threshold. That is an amount to the presonal allowance and would see you pay NI.

    The NI can be less than the corporation tax with the employment allowance though
  • dunstonh
    dunstonh Posts: 121,215 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    Prism wrote: »
    The NI can be less than the corporation tax with the employment allowance though

    But don't you need a non-director employee earning above the secondary threshold to be able to qualify for that?
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • Marcon
    Marcon Posts: 15,868 Forumite
    Ninth Anniversary 10,000 Posts Name Dropper Combo Breaker
    Prism wrote: »
    Why do you say that? I used to use the same system until I was no longer eligible

    Because there is no need to pay any NI provided you are above the threshold for NI credits. Why pay a tax if you don't need to (and NI is a tax)?
    Googling on your question might have been both quicker and easier, if you're only after simple facts rather than opinions!  
  • Prism
    Prism Posts: 3,861 Forumite
    Eighth Anniversary 1,000 Posts Name Dropper
    dunstonh wrote: »
    But don't you need a non-director employee earning above the secondary threshold to be able to qualify for that?
    It doesn't apply to me but I am pretty sure that if there are two directors, both earning above secondary threshold then it applies. I assume from the OPs first post that is the case
  • Prism
    Prism Posts: 3,861 Forumite
    Eighth Anniversary 1,000 Posts Name Dropper
    Marcon wrote: »
    Because there is no need to pay any NI provided you are above the threshold for NI credits. Why pay a tax if you don't need to (and NI is a tax)?
    Yes I know that. However if you don't pay NI then you do pay corporation tax. And that can be more is this particular case. It looks like the OP is eligible for employment allowance which allows the company to write off a whole load of NI
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