Voluntary Class 2 NI Payments

DoDa

An article in Money Observer states “ You can instead pay cheaper Class 2 NI contributions, but only if you are self-employed on low earnings, unemployed and not claiming benefits, or living abroad. These cost £156, which is even better value“.

I choose not to work/earn any money in the 2018/2019 tax year so I could go travelling. The only taxable income I received during this time was interest on savings (all within the personal allowance, so no tax paid) and I received no benefits. Would I be able to make class 2 NI contributions in this case?

MrsFingersCrossed

In theory, yes, but first you would have to register as self employed.

Then you would have to fill in a self assessment tax form declaring minimal self employed earnings (from those odd bits you sold on Ebay? / the occasional odd jobs you did for pin money?). You can even make a loss, for example you might have earned £100 from odd gardening jobs but your new lawn mower cost £150).

You would then have the option of paying voluntary class 2 National Insurance and gain a year towards your full state pension, assuming you are short of the required number of years. I assume you are aiming for the full new state pension requiring 35 years.

nigelbb

This is easier to arrange in advance of travelling abroad & there is no need to do income tax self assessment. Download leaflet NI38 and fill in form CF83 in the back & arrange to pay voluntary Class 2 by direct debit while abroad. Just tick the box that you will be self-employed abroad https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/832814/NI38.pdf

Dazed_and_confused

I assume you are aiming for the full new state pension requiring 35 years.

Without knowing the op's age it's impossible to say if 35 years is relevant.

For most people the new rules don't apply in full, they are under transitional rules where 30 years might be enough to get to £168.60.

And 40 years might be insufficient to get there.

Albermarle

There was a section in todays Moneybox radio programme about people paying Class 2's and finding later they were not entitled to a full state pension .
https://www.bbc.co.uk/programmes/m000bl2k

Notepad_Phil

Albermarle wrote: »

There was a section in todays Moneybox radio programme about people paying Class 2's and finding later they were not entitled to a full state pension .
https://www.bbc.co.uk/programmes/m000bl2k

Are you sure, I'm pretty sure the person had paid Class 4 National Insurance but had not also paid for Class 2 - which is how you get the contribution to the state pension.

nick74

The issue referred to on Moneybox was a quirk of the system where it was possible to complete the self employment section of a tax return and pay Class 4 NIC on your profits, without ever having registered as self employed to pay Class 2 NIC. The two systems were never linked up by HMRC so there were self employed people paying Class 4 without Class 2 and therefore not building up any entitlement to a state pension. It shouldn't be possible now in theory as Class 2 is paid via Self Assessment.

Dazed_and_confused

It is still possible now I'd you haven't registered as self employed with the National Insurance part of HMRC.

Saying you want to pay Class 2 on your Self Assessment return won't work if you haven't done that.

nick74

Dazed_and_confused wrote: »

It is still possible now I'd you haven't registered as self employed with the National Insurance part of HMRC.

Saying you want to pay Class 2 on your Self Assessment return won't work if you haven't done that.

Thank you, I wasn't aware of that.