National Insurance Contributions Gap Filling….

invisible_member

My wife gets to retirement age September 2023, her record shows that she has 24 years of full contributions, all prior to 2000….in addition, also 24 years where she did not contribute enough.

She was a self-employed partner from 2001 onwards up until 2013, however, she was not earning enough to become liable to pay class 2 stamp and did not know at the time that it would have been wise to do so. Confirmation has recently been received from HM Revenue & Customs confirming the self-employment period.

Firstly, as we know, she is allowed to go back to 2006-2007 onwards to plug NIC gaps, and the question is whether she can use class 2 contributions rather than class 3 to do this for the years that she was classed as self-employed, thus plugging 50% of her gaps at the cheaper class 2 rate?

Secondly, for some reason, her forecast states a maximum possible forecast of £179.86 (screenshot attached), this seems to be 1 year short, there are more than enough years to make up the 11 years short, so not too sure if anyone could explain why this to be the case?

 

Thanks in advance for all input…     

molerat

Was she ever in a contracted out pension - does the forecast show a COPE amount ?

I have thrown those figures into my spreadsheet and agree that the 2 years going forward  brings the amount up to £137.54.  Adding the remaining 5 post 2016 years  - 2016-17 to 2020-21 - brings it up to £163.99. If no COPE amount then £179.86 suggests that only 3 pre 2016 years are available to purchase

What does her NI record show as available to purchase years ?

invisible_member

molerat said:

Was she ever in a contracted out pension - does the forecast show a COPE amount ?

I have thrown those figures into my spreadsheet and agree that the 2 years going forward  brings the amount up to £137.54.  Adding the remaining 5 post 2016 years  - 2016-17 to 2020-21 - brings it up to £163.99. If no COPE amount then £179.86 suggests that only 3 pre 2016 years are available to purchase

What does her NI record show as available to purchase years ?

Thanks molerat,

I do not see anything on COPE anywhere....

The NI record shows all years from 2006-07 available to present date, all be it at class 3 rates, which is why I was asking about the self-employment history for class 2 possibility....

Mystery to me on the 1 year short at moment....   

xylophone

The NI record shows all years from 2006-07 available to present date, all be it at class 3 rates, which is why I was asking about the self-employment history for class 2 possibility....

Your wife should check.  

https://www.dpf.org.uk/explorer/files/TOPPING-UP-YOUR-STATE-PENSION-GUIDE.pdf

If you have gaps in your National Insurance (NI) record you may be able to make up the gaps and
so increase your State Pension, by paying voluntary National Insurance contributions (NICs). However, you can’t fill a gap if, in the year in question, you were:

• over State Pension age at any point or
• eligible to pay the special reduced ‘married woman’s rate’ of National Insurance for that year, or

• exempt from paying NI as a self-employed person because you held a low earnings exception certificate. However, you may be able to pay voluntary Class 2 NICs - the special category of NI for the self-employed - and the cost of this is just £2.80 per week at 2016/17 rates.

invisible_member

xylophone said:

The NI record shows all years from 2006-07 available to present date, all be it at class 3 rates, which is why I was asking about the self-employment history for class 2 possibility....

Your wife should check.  

If you have gaps in your National Insurance (NI) record you may be able to make up the gaps and
so increase your State Pension, by paying voluntary National Insurance contributions (NICs). However, you can’t fill a gap if, in the year in question, you were:

• over State Pension age at any point or
• eligible to pay the special reduced ‘married woman’s rate’ of National Insurance for that year, or

• exempt from paying NI as a self-employed person because you held a low earnings exception certificate. However, you may be able to pay voluntary Class 2 NICs - the special category of NI for the self-employed - and the cost of this is just £2.80 per week at 2016/17 rates.

Thanks xylophone,

It seems that you are agreeing that this could be possible, that's what I am thinking after reading many sources on information, including the Royal London link you kindly gave, it seems a struggle however in getting HM Revenue & Customs to agree.

After initially phoning, was put through to the HMRC National Insurance Contributions and Employer Office, who said that it would be possible to hand pick years to pay class 2 stamp back to 2006-2007, and to write in. After doing this their response was that she is time barred for back paying class 2 stamp for self-employment period, but also added that she can pay the class 3 instead......

I quote:

"Self-Assessment shows that you were registered as a Partner from 5th February 2001 to 5th February 2013, and no further tax returns have been submitted. I have therefore registered you as self-employed for National Insurance purposes from week commencing 5th February 2001 to week ending 8th February 2013.

Unfortunately. it is too late now to pay class 2 NIC's for any of these years, certificate CA6818 is enclosed for your reference. I have therefore forwarded your letter to individuals Caseworker, who will be able to advise you about paying voluntary class 3 NIC's."

Basically the CA6818 says:

"We are writing to you because you should have paid Class 2 National Insurance contributions for the periods shown below,

5 February 2001 to 9 February 2013.

In your particular circumstances we have decided that we will not insist that you pay these Class 2 National Insurance contributions. This concession of not paying National Insurance contributions only applies to the periods shown. It does not give you any credited National Insurance contributions and may affect your entitlement to benefits and reduce your State Pension.

About the National Insurance contributions you should have paid 

We will not insist that you pay Class 2 National Insurance contributions because National Insurance contributions for the period shown are time-barred for benefit purposes.   

Time-barred National Insurance contributions

You must pay National Insurance contributions by a certain date for them to count for benefit. We call these dates 'time limits' and not paying before a time limit can affect your right to benefit.

If you disagree with anything in this letter, tell us why as soon as possible. We will consider what you have told us and get back to you."

What do we think?  

   

molerat

Very interesting and covers the "only 3 pre 2016 years being available", 2013-14 to 2015-16, giving the £179.86 figure.  But class 3 should still be available to cover those other years which would lead to the full £185.15.  Maybe the computer has just got itself in a twist.  Have you spoken to the FPC, part of DWP rather than HMRC ?

https://www.gov.uk/future-pension-centre

I am also of the opinion though that class 2 voluntary contributions should still be available as in xylophone's post above, most of that you have stated above seems to be pointed towards compulsory class 2.

xylophone

I am no expert on NI but I am puzzled that you would be permitted to "back pay"  post 2006 with Class 3 but not class 2.

The reason given is "time limiting" but under normal circumstances, time limiting would also apply to paying Class 3 for those years?  

A concession has been granted for those years - why does it not apply to the self employed who would have paid class 2?

As molerat suggests, try the FPC.

invisible_member

molerat said:

Very interesting and covers the "only 3 pre 2016 years being available", 2013-14 to 2015-16, giving the £179.86 figure.  But class 3 should still be available to cover those other years which would lead to the full £185.15.  Maybe the computer has just got itself in a twist.  Have you spoken to the FPC, part of DWP rather than HMRC ?

I am also of the opinion though that class 2 voluntary contributions should still be available as in xylophone's post above, most of that you have stated above seems to be pointed towards compulsory class 2.

Thanks for the reply molerat,

My National Insurance record did show all years available to purchase back to 2006-2007 but all at Class 3 rates, however, this was before us corresponding with HM Revenue & Customs and their responses above, I just looked again at her National Insurance record for the first time since, and it has changed, here is a screenshot of what it now says for the self-employed years in question 



This would explain the hold on being the 1 year short, only allowing for now to go back to 2013-2014 (as you rightly stated).

Myself, as the other partner in the Partnership did however pay voluntary Class 2 stamps for this period in time and am sure our accountant told me that the wife did not need to......did my stamp cover her as well, possibly, and this is what they are looking into?

We have not spoke to FPC and that is good advice....