Just about to retire early - how can I increase state pension to maximum?

zagfles

Dazed_and_C0nfused said:

You will presumably also receive an additional year for the current tax year?  Leaving you potentially with just two years to accrue.

This is worth a read re 2021:22.

https://www.thisismoney.co.uk/money/pensions/article-7873583/How-qualifying-years-state-pension-worked-out.html

The cheapest option is to start a small business, register it with HMRC and complete 2 (or maybe 3) Self Assessment returns and pay voluntary Class 2 National Insurance at c£160/year.

Alternatively you can pay voluntary Class 3 National Insurance at c£800/year.

Good explaination in that article except he misses the bit about earnings above the UEL not counting.

Not sure the idea of pretending to be self employed would work. People tried that to claim working tax credit but HMRC cottoned on...it had to be genuine self employment with the aim of making a profit.

Dazed_and_C0nfused

zagfles said:

Dazed_and_C0nfused said:

You will presumably also receive an additional year for the current tax year?  Leaving you potentially with just two years to accrue.

This is worth a read re 2021:22.

https://www.thisismoney.co.uk/money/pensions/article-7873583/How-qualifying-years-state-pension-worked-out.html

The cheapest option is to start a small business, register it with HMRC and complete 2 (or maybe 3) Self Assessment returns and pay voluntary Class 2 National Insurance at c£160/year.

Alternatively you can pay voluntary Class 3 National Insurance at c£800/year.

Good explaination in that article except he misses the bit about earnings above the UEL not counting.

Not sure the idea of pretending to be self employed would work. People tried that to claim working tax credit but HMRC cottoned on...it had to be genuine self employment with the aim of making a profit.

I'm not suggesting it is anything but being genuinely self employed.

But you don't have to set out trying to become the next Elon Musk.

You can have a micro business and providing you register as self employed with HMRC and complete Self Assessment returns you can make voluntary Class 2 National Insurance contributions.

The return is actually designed so you can declare that your self employed income for a given tax year is covered by the "trading allowance" and still pay voluntary Class 2 National Insurance.  You can look at the 2019:20 return on gov.uk and follow the guidance on how to complete it to see how it works.

zagfles

j.p said:

zagfles said:

j.p said:

The fact that you're well-paid and your deductions for NI contributions are high doesn't mean you can accrue them faster than those who earn less, working fewer weeks. That excess you're paying for the weeks you're working can't buy you anything extra or stand for other weeks or months; it's just excess. It pays extra into the state's coffers so that other people (or society) can benefit from it; it doesn't benefit you individually.

This is rubbish. Read the article linked above

Thanks for the r****** word. Very kind of you.
As for the accuracy of my remarks or correctness of my views, I should perhaps qualify what I said earlier, about whether paying NI in excess could buy you [the same] benefits.
So say someone earns over £9.5k yearly and over that figure they 'magically' start paying nearly 10% NI whereas if they were below they'd pay a pittance. And I'd say they're paying 4/5th excess (400% more because they're in that bracket) than a poorly-paid person to get the same benefit. So all right, perhaps not 100% of their NI pay outs is wasted, and perhaps it does buy benefit at the end of the day (year), but it's been an excess, and it's been wasteful (unless you think of the greater benefit to society). At least 80% wasteful.
That's how @tacpot12 can write, (quote) Perhaps not surprisingly, these figures are about the same as the Voluntary Class 3 contributions you will pay to buy the missing years. (end quote)
Because unlike tax, which if you've overpaid at the end of the year you can get back, if you've overpaid NI for a month or two by placing yourself in a higher bracket I don't think that at the end of the year you can get that back.
And I don't see the point of wishing to to cover a year of NI contributions by way of working, if they're gonna end up costing you the same as if you paid from savings, and you have savings. In these circumstances, I'd say if you choose to pay through work over paying from savings it's because you like work, not because paying from work is better. Or maybe because you think that money in savings has somehow to be treated differently than money from earnings, but in your conscious mind perhaps you haven't yet spelled that out. So money from savings couldn't be spent in paying NI at the rate of Class 3 contributions for some reason, but money from earnings (before earnings could be added to savings) for some reason can? Why? Why does moving money from earnings to savings change the way you're supposed to use it?
I'd say the answer should be "By all means pay that through additional work if you feel like doing that (and if that would work as the link would like to suggest), but don't say we haven't told you that simply paying as additional voluntary contributions could be just as effective, simpler, and probably not more expensive".

What are you on about? You clearly don't understand how NI works.

The OP wanted to know whether 2 months of earnings at £4k a month would count as a qualifying year for the state pension. The answer is yes. The link provided by D&C and molerat's posts explain it well.

zagfles

Dazed_and_C0nfused said:

zagfles said:

Dazed_and_C0nfused said:

You will presumably also receive an additional year for the current tax year?  Leaving you potentially with just two years to accrue.

This is worth a read re 2021:22.

https://www.thisismoney.co.uk/money/pensions/article-7873583/How-qualifying-years-state-pension-worked-out.html

The cheapest option is to start a small business, register it with HMRC and complete 2 (or maybe 3) Self Assessment returns and pay voluntary Class 2 National Insurance at c£160/year.

Alternatively you can pay voluntary Class 3 National Insurance at c£800/year.

Good explaination in that article except he misses the bit about earnings above the UEL not counting.

Not sure the idea of pretending to be self employed would work. People tried that to claim working tax credit but HMRC cottoned on...it had to be genuine self employment with the aim of making a profit.

I'm not suggesting it is anything but being genuinely self employed.

But you don't have to set out trying to become the next Elon Musk.

You can have a micro business and providing you register as self employed with HMRC and complete Self Assessment returns you can make voluntary Class 2 National Insurance contributions.

The return is actually designed so you can declare that your self employed income for a given tax year is covered by the "trading allowance" and still pay voluntary Class 2 National Insurance.  You can look at the 2019:20 return on gov.uk and follow the guidance on how to complete it to see how it works.

Well, yes, becoming self employed is one way to get NI cheaper than voluntary conts, another way to get them even cheaper, for zero cost, is to get a job paying just over the LEL and below the PT. Then you pay no NI but get credits.

p00hsticks

zagfles said:

Dazed_and_C0nfused said:

zagfles said:

Dazed_and_C0nfused said:

You will presumably also receive an additional year for the current tax year?  Leaving you potentially with just two years to accrue.

This is worth a read re 2021:22.

https://www.thisismoney.co.uk/money/pensions/article-7873583/How-qualifying-years-state-pension-worked-out.html

The cheapest option is to start a small business, register it with HMRC and complete 2 (or maybe 3) Self Assessment returns and pay voluntary Class 2 National Insurance at c£160/year.

Alternatively you can pay voluntary Class 3 National Insurance at c£800/year.

Good explaination in that article except he misses the bit about earnings above the UEL not counting.

Not sure the idea of pretending to be self employed would work. People tried that to claim working tax credit but HMRC cottoned on...it had to be genuine self employment with the aim of making a profit.

I'm not suggesting it is anything but being genuinely self employed.

But you don't have to set out trying to become the next Elon Musk.

You can have a micro business and providing you register as self employed with HMRC and complete Self Assessment returns you can make voluntary Class 2 National Insurance contributions.

The return is actually designed so you can declare that your self employed income for a given tax year is covered by the "trading allowance" and still pay voluntary Class 2 National Insurance.  You can look at the 2019:20 return on gov.uk and follow the guidance on how to complete it to see how it works.

Well, yes, becoming self employed is one way to get NI cheaper than voluntary conts, another way is to get them even cheaper, for zero cost, is to get a job paying just over the LEL and below the PT. Then you pay no NI but get credits.

Another way to get credits at no cost is to provide care for grandchildren whilst their parents are working

https://www.gov.uk/government/publications/national-insurance-credits-for-adults-who-care-for-a-child-under-12-fact-sheet

fly-catchers

Dazed_and_C0nfused said:

zagfles said:

Dazed_and_C0nfused said:

You will presumably also receive an additional year for the current tax year?  Leaving you potentially with just two years to accrue.

This is worth a read re 2021:22.

https://www.thisismoney.co.uk/money/pensions/article-7873583/How-qualifying-years-state-pension-worked-out.html

The cheapest option is to start a small business, register it with HMRC and complete 2 (or maybe 3) Self Assessment returns and pay voluntary Class 2 National Insurance at c£160/year.

Alternatively you can pay voluntary Class 3 National Insurance at c£800/year.

Good explaination in that article except he misses the bit about earnings above the UEL not counting.

Not sure the idea of pretending to be self employed would work. People tried that to claim working tax credit but HMRC cottoned on...it had to be genuine self employment with the aim of making a profit.

I'm not suggesting it is anything but being genuinely self employed.

But you don't have to set out trying to become the next Elon Musk.

You can have a micro business and providing you register as self employed with HMRC and complete Self Assessment returns you can make voluntary Class 2 National Insurance contributions.

The return is actually designed so you can declare that your self employed income for a given tax year is covered by the "trading allowance" and still pay voluntary Class 2 National Insurance.  You can look at the 2019:20 return on gov.uk and follow the guidance on how to complete it to see how it works.

Don't you have to make a minimum amount of money as self employed to make a  voluntary Class 2 National Insurance contributions?

Dazed_and_C0nfused

fly-catchers said:

Dazed_and_C0nfused said:

zagfles said:

Dazed_and_C0nfused said:

You will presumably also receive an additional year for the current tax year?  Leaving you potentially with just two years to accrue.

This is worth a read re 2021:22.

https://www.thisismoney.co.uk/money/pensions/article-7873583/How-qualifying-years-state-pension-worked-out.html

The cheapest option is to start a small business, register it with HMRC and complete 2 (or maybe 3) Self Assessment returns and pay voluntary Class 2 National Insurance at c£160/year.

Alternatively you can pay voluntary Class 3 National Insurance at c£800/year.

Good explaination in that article except he misses the bit about earnings above the UEL not counting.

Not sure the idea of pretending to be self employed would work. People tried that to claim working tax credit but HMRC cottoned on...it had to be genuine self employment with the aim of making a profit.

I'm not suggesting it is anything but being genuinely self employed.

But you don't have to set out trying to become the next Elon Musk.

You can have a micro business and providing you register as self employed with HMRC and complete Self Assessment returns you can make voluntary Class 2 National Insurance contributions.

The return is actually designed so you can declare that your self employed income for a given tax year is covered by the "trading allowance" and still pay voluntary Class 2 National Insurance.  You can look at the 2019:20 return on gov.uk and follow the guidance on how to complete it to see how it works.

Don't you have to make a minimum amount of money as self employed to make a  voluntary Class 2 National Insurance contributions?

No.  But you do have to register as self employed and complete Self Assessment returns.

Paspatur

I retired in 2015 at age 55. I was 2 years short of a full state pension. As I am an accountant I had done my self employed brothers accounts and tax return for years free of charge. I registered as self employed and charged my brother £200 each year for 2 years to do his accounts and tax return. I paid £40 tax and made voluntary Class 2 NI contribution of £145.60 leaving me with £14.40. This was slightly less in the second year but still left me in pocket. As a 40% tax payer the cost to my brother was £120 for each year. I now have a full state pension to look forward to and have gone back to doing my brothers accounts and tax return for free (although thankfully for the last time this year due to his retirement). My tax return took minutes each year and at that time I had to do one anyway due to rental income. Sounds like a cheat but is perfectly within the rules and the alternative was over £700 a year voluntary Class 3. Obviously took my time to do his accounts and tax return every year but as a tradesman he did lots of work for me over the years free of labour charge.