Self employed NIC gap of 17 years help!!

Sssss12346

Can someone please help me understand this. I checked my pension forecast and NI record and apparently I have 17 years gap on my NI record.

I have always been SE and done my tax returns online and I know before that I did not voluntarily pay the Class 2 NIC not fully understanding it’s consequences. However I thought they then changed it and it was going to take it off automatically if you were over the threshold which I always have been. I even tried one year to select the voluntary but it wouldn’t let me as my earnings were more than threshold.  

So it appears that now for some reason I haven’t been paying the class 2 and now have no way to make up enough full years unless I pay.

I have full credits for 20/21 though for some reason which I don’t get coz I noticed on my return this year that it calculated the Class 2 as £0 on the return but the other guys I work with theirs calculated at £150 odd. So I don’t think have paid for this year. Any idea why would be showing credits this year and not any others?

Also it says online I can make payment on each of the years going back to like 2006 but it’s got different amounts I need to pay for each year ranging from £544 - £800. Some years show certain number of weeks credits - again no idea why? I don’t get these high amounts though to correct it for each year as the class 2 is only £150 odd per year so why would I need to pay like £800? Surely that can’t be right, gonna cost me about £10k to correct at this point.

my wife has loads of credits on hers, one year she showing 122 weeks credits!!! she has her 22 full years coz she always paid full NI and been told she has extra credits for the child benefit also, do they allow you to transfer surplus credits from your spouse on previous years does anyone know? Trying to figure out best way to correct this. 

Dazed_and_C0nfused

Sounds like you never registered as self employed with the National Insurance part of HMRC.

What did you do when your Self Assessment calculation did not include the Class 2 National Insurance each year?  Just pay the lower amount of tax (and Class 4 National Insurance) due or did you question this with HMRC at the time?

Also, do you fully understand the implications on your State Pension?  You are under transitional rules so it is important you have read the whole of your forecast, not just the headline figjde.

If you post the figures, particularly the amount accrued to date and how old you are it should be possible to explain what this really means for your State Pension.

Jeremy535897

It sounds as if you were never registered as self employed for class 2 NIC purposes, and that is why you did not pay the monthly direct debit. When class 2 NIC was changed to be assessed with income tax and class 4 NIC, it still did not pick up those who had never registered. If you tried to tick the voluntary payment box, it would not do anything, as you discovered. That does not explain why you have credit for 2020/21 though. I am surprised it actually says anything about 2020/21 as it ended so recently. Did you take on some employment perhaps, or claim any benefits?

To get registered for class 2 NIC, you will need to complete a form CWF 1. See https://www.litrg.org.uk/tax-guides/self-employment/how-do-i-register-tax-and-national-insurance

See https://www.gov.uk/voluntary-national-insurance-contributions/who-can-pay-voluntary-contributions about making up the gap. You can normally only make up 6 years of the gap, although you may be asked to pay more.

On the figures you quote, my guess is that you are mixing up class 2 voluntary contributions (which only self employed people can make) with class 3 voluntary contributions, which attract more benefits but are a lot dearer.

No transfers are possible between husband and wife.

Sssss12346

Dazed_and_C0nfused said:

Sounds like you never registered as self employed with the National Insurance part of HMRC.

What did you do when your Self Assessment calculation did not include the Class 2 National Insurance each year?  Just pay the lower amount of tax (and Class 4 National Insurance) due or did you question this with HMRC at the time?

Also, do you fully understand the implications on your State Pension?  You are under transitional rules so it is important you have read the whole of your forecast, not just the headline figjde.

If you post the figures, particularly the amount accrued to date and how old you are it should be possible to explain what this really means for your State Pension.

Thanks - it says forecast assumes I will contribute for another 30 years and that I have only contributed 5 years but need minimum of 10 years to get anything. The 30 years I assume is to have enough credits for the full pension amount it shows at the top of the page. I only have 30 more years until I reach the state pension age, I’m 38 this month.  

My biggest concern now though from what I’ve read is that I’ve not been paying compulsory amounts of NI. Surprised not had letter from HMRC demanding it to be honest. 

Think I am gonna need to call them and just pay what they say I owe for the compulsory. Do you know if they charge you penalties or interest or anything for late payments coz from what I can see from the records I probably should have paid compulsory ever since they started it. 

[Deleted User]

The penalties for non-payment of Class 2 are strange in that the current rate is applied for all years - that is it!

Sssss12346

Jeremy535897 said:

It sounds as if you were never registered as self employed for class 2 NIC purposes, and that is why you did not pay the monthly direct debit. When class 2 NIC was changed to be assessed with income tax and class 4 NIC, it still did not pick up those who had never registered. If you tried to tick the voluntary payment box, it would not do anything, as you discovered. That does not explain why you have credit for 2020/21 though. I am surprised it actually says anything about 2020/21 as it ended so recently. Did you take on some employment perhaps, or claim any benefits?

To get registered for class 2 NIC, you will need to complete a form CWF 1. See https://www.litrg.org.uk/tax-guides/self-employment/how-do-i-register-tax-and-national-insurance

See https://www.gov.uk/voluntary-national-insurance-contributions/who-can-pay-voluntary-contributions about making up the gap. You can normally only make up 6 years of the gap, although you may be asked to pay more.

On the figures you quote, my guess is that you are mixing up class 2 voluntary contributions (which only self employed people can make) with class 3 voluntary contributions, which attract more benefits but are a lot dearer.

No transfers are possible between husband and wife.

Thanks mate think your right, gonna need to call and probably pay all the Class 2 I was required to pay over the years. Glad I checked and looked into this. 

I assume then that the gaps record is saying £800.80 for most years as it’s assuming I would pay Class 3 but actually cause I’m SE I can pay the lesser Class 2 amounts of £150 odd and still get it changed to full year. Is that right?

for info my records show full years from 1999-2003 as I was apprentice probably.

Every year after that with exception of 2020-21 is not full. Most have nothing paid (done have amounts from paid employment which I don’t get - never been in paid employment always CIS SE). I have 52 weeks credit showing on the 2020-21 one. I did try to claim UC last year when unable to work wasn’t entitled due to wife still working but also claimed some grants so maybe that’s why.
Also my tax return for this year 20-21 is undergoing security checks so maybe they have noticed I’m not paying the class 2 when I should be and in process of correcting it - do HMRC do that do you know?

It says I’m too late to pay anything on the years from 2003-2006 but from 2006 says can make voluntary payment by 05/04/2023. The years with no contributions at all are £800.80 and the years with contributions are different amounts I assume based on what I’ve already contributed. Do you know when the compulsory class 2 came in?

Jeremy535897

You should pay class 2 NIC for the years you earned more than the threshold, not class 3. For years where class 2 NIC is voluntary, I think you can choose, but class 2 is a lot cheaper. Class 2 NIC has been around a lot longer than you have.