Not working, but rent out 1 property (What NI should I pay and how) (Self employed or not)

joanie3

I hope I am posting in the right place.
I seem to be confusd since the change in how the tax return is done and what my status should be.
I have always worked, whether it be full or part time, but aound 3 years ago, became a carer to my late father, my boss at the time was not too helpful over my swapping shifts to allow me to take him to Cancer check ups.  Long story short I resigned. 
So apart from claiming carers allowance at that time, I had some 'income' from rental property. 
Meanwhile my husband has not been able to work (stress related issues among other things). So since I ceased being a carer for my father, I later applied to be a carer for my husband.  This was a year ago and I was rejected as I now earn too much to be a carer (due to the way the tax return has changed how income is reported.  I asked about NI credits and was told I ought to be paying NI for the earning on the property.
I was also told I should be paying national insurance.  I ended up having conversations between the tax office and National Insurance and was more confused as I went along, told I need not be self emplyed as I don't fill that criteria.
Meanwhile I am getting nearer to retirement, thought (yeah I know I should not have relied on what I was told under the old system), tha tI had paid enough NI contributions, but now I have some years missing (when I was off sick from work) and the last couple as I don't know what to do.
Out of many sites I have looked at the answers are confusing as it seems someone with just 1 property rented out is not what is catered for.
Obviosuly Covid means phone lines and other advise is not as easily obtained. 
At the end of the day the 'profit' pays for BTL mortgage and some way towards food and bills, I don't earn enough to pay tax even.
Can someone help me towards NI help and what class if any I should pay, whether I ought to be self employed, or use an accountant.
Thanks

p00hsticks

My understanding is that income from a single rental property is classed as 'income' rather than 'earnings' and so is liable to income tax but not NI..

As far as your future pension goes, your first step is to get your individual state pension forecast here

https://www.gov.uk/check-state-pension

That will tell you what both you would get on your current record, by how much you could increase it, how many more years you need to pay to get to the maximum. how many more years you have available to do it, and whether you have any gaps in your record. 

Once you have done that, if you post all the details either here or over on the Pension board someone will be able to comment further on whether it is likely to be worthwhile making voluntary contributions and which class (likely to be Class 3, unless you set yourself up as having a self employed business (dog walking, etsy crafts etc) with the primary reason being in order to pay the cheaper Class 2 contributions, as some over on the Pensions board may recommend). 

joanie3

p00hsticks said:

My understanding is that income from a single rental property is classed as 'income' rather than 'earnings' and so is liable to income tax but not NI..

As far as your future pension goes, your first step is to get your individual state pension forecast here

https://www.gov.uk/check-state-pension

That will tell you what both you would get on your current record, by how much you could increase it, how many more years you need to pay to get to the maximum. how many more years you have available to do it, and whether you have any gaps in your record. 

Once you have done that, if you post all the details either here or over on the Pension board someone will be able to comment further on whether it is likely to be worthwhile making voluntary contributions and which class (likely to be Class 3, unless you set yourself up as having a self employed business (dog walking, etsy crafts etc) with the primary reason being in order to pay the cheaper Class 2 contributions, as some over on the Pensions board may recommend). 

Thanks for the above info, now it has raised 2 questions, 

firstly 

As I am not earning (only getting income, then no NI due), can I go back to arguing the case about being a carer once again, as this is what I do? 

secondly

I have just done this and it seems I have 5 more years to contribute to get "full" pension, but in the years I have not paid in full the amounts due are shown below, two of the years are lower than the full amount needed, should I at least pay these and then worry about the other 3 by doing class 3 contributions (if so, how do I do please?)

You have:

• 39 years of full contributions
• 5 years to contribute before 5 April 2025
• 6 years when you did not contribute enough

View all years of contributions

2020-21

Your record for this year is not available yet

 2019-20

Year is not full

You did not make any contributions this year

You can make up the shortfall

Pay a voluntary contribution of £780 by 5 April 2026    

 2018-19

Pay a voluntary contribution of £102.55 by 5 April 2025  

• Lower amount so, should I pay this?

  2017-18

Pay a voluntary contribution of £45.90 by 5 April 2024.

•  Lower amount so, should I pay this?

2016-17

Pay a voluntary contribution of £780.30 by 5 April 2023. 

Many thanks for any help offered

Dazed_and_C0nfused

The two cheap years are great value, for each extra year you add £5/week to your State Pension forecast.

Be aware that the fifth year may not be as beneficial. If buying 4 years takes your forecast to say £174.10 then the fifth year will only add £1.10/week, taking you to £175.20/week, that one won't add £5/week.

p00hsticks

joanie3 said:

Thanks for the above info, now it has raised 2 questions, 

firstly 

As I am not earning (only getting income, then no NI due), can I go back to arguing the case about being a carer once again, as this is what I do? 

Sorry, I can't answer that one - I suggest you ask over on the benefits board

https://forums.moneysavingexpert.com/categories/benefits-tax-credits

Note that even if you are not eligible to recieve Carer's Allowance, you may be able to claim 'Carers credits' which would give you NI credits going forward.

https://www.gov.uk/carers-credit

joanie3 said:

secondly

I have just done this and it seems I have 5 more years to contribute to get "full" pension, but in the years I have not paid in full the amounts due are shown below, two of the years are lower than the full amount needed, should I at least pay these and then worry about the other 3 by doing class 3 contributions (if so, how do I do please?)

You have:

• 39 years of full contributions
• 5 years to contribute before 5 April 2025
• 6 years when you did not contribute enough

Are you SURE you need five more years - what are the amounts quoted in your forecast (it should say what it is currently and, if you can increase it, to how much).

As far as I'm aware the '5 years to contribute before 5 April 2025' simply means that you have five years available to make payments before you reach state pension age - not necessarily that paying them will result in an increase.

If you do need to make up extra years then, as Dazed_and_confused says, making the 2017-18 and 208-19 years full would make sense as these are the cheapest. Detaisl on the process are here; https://www.gov.uk/voluntary-national-insurance-contributions

- you can either ring HMRC and tell them what years you want to pay and they'll give you a reference number and account to make a Faster Payment or yo can write to them (include your NI number~) with a cheque and detials of which years you want the payment to go towards.

But as you have until 2024 to do that, I suggest that before you actually pay out any money you first confirm that you need extra years, and follow up whether you can claim carers allowance or carers credits that would avoid the need to fill back years.

joanie3

Are you SURE you need five more years - what are the amounts quoted in your forecast (it should say what it is currently and, if you can increase it, to how much).

As far as I'm aware the '5 years to contribute before 5 April 2025' simply means that you have five years available to make payments before you reach state pension age - not necessarily that paying them will result in an increase.

If you do need to make up extra years then, as Dazed_and_confused says, making the 2017-18 and 208-19 years full would make sense as these are the cheapest. Detaisl on the process are here; https://www.gov.uk/voluntary-national-insurance-contributions

- you can either ring HMRC and tell them what years you want to pay and they'll give you a reference number and account to make a Faster Payment or yo can write to them (include your NI number~) with a cheque and detials of which years you want the payment to go towards.

But as you have until 2024 to do that, I suggest that before you actually pay out any money you first confirm that you need extra years, and follow up whether you can claim carers allowance or carers credits that would avoid the need to fill back years.

I've just done the forecast and this is what they have said.

You need to continue to contribute National Insurance to reach your forecast
Estimate based on your National Insurance record up to 5 April 2020
£153.09 a week
Forecast if you contribute another 5 years before 5 April 2025
£175.20 a week
£175.20 is the most you can get
There is a difference of over £20 a week, so I guess it makes sense to pay this, but like you say I have a while until I have to pay the contributions.

Thanks for help

Dazed_and_C0nfused

The first four years purchased will each add £5 or £5.01/week.

The fifth year just the remaining £2.10

joanie3

Dazed_and_C0nfused said:

The first four years purchased will each add £5 or £5.01/week.

The fifth year just the remaining £2.10

The amount they are asking for unpaid years is £780. Depending on the answer of whether I could claim NI credits or how I pay NI going forward as to whether I ought to pay the 2 lower years or not.
Thanks for this information, so useful and informative 

molerat

If you are not able to get credits through employment or benefits for the next 5 years it most certainly is worth paying those 2 part filled cheap years.

Both those amounts quoted will increase by inflationary uplifts after April 5 this year to around £46.20 and £107.80 (actual 21-22 amounts have not been published yet) and again in April each year going forwards. Even 16-17 will save you one week, currently £15.30, over a full year  

https://www.gov.uk/pay-voluntary-class-3-national-insurance