Class2 NI to get 2 years contribution for £164 PA with income under £1000 - is it really possible?

molerat

Altior said:

So you're fully retired, income circa £40K, and still planning to invoice your own daughter for doing her a favour and occasionally looking after somebody else's dog for her? Is it really worth all that faff, researching legislation, creating invoices and tax returns for a few quid off her? If it was me, I'd be inclined to do it gratis, or be treated to the odd meal out if you really feel the need to 'earn' out of the scenario. 

But it is not the "few quid off her" Op wants but the cheap state pension years that come from self employment.

Altior

If it's a ruse to extract another £8 a week from the taxpayer, that's a different story I guess. If this is a legitimate scenario, surely all that faff is not worth an extra £8 a week...

Dazed_and_C0nfused

itsmeagain said:

Dazed_and_C0nfused said:

itsmeagain said:

Dazed_and_C0nfused said:

Also (may be obvious to you), I assume I still get the under £1k tax free trading allowance after filing the self assessment?

No, it is part of the process of completing the Self Assessment return, not something that happens after completing the return.

Apologies - I'm not talking about the timing of events. I'm asking... if I fill in the self assessment, do I still get the £1k trading allowance that I would have got if I hadn't done the self assessment. I.e, do you get the £1k trading allowance whether you do a self assessment or not?

You would probably be best looking through the paper returns on gov.uk.

Many thanks for your patience. It's not easy to find discussions on examples of people with a self employed income of less than £1k that want to do a tax return just to pay class 2 NI.

Even when you call HMRC they tell you that you a return for less than £1k but they don't know how to pay the class 2!

Having agreed to do some self employed work for them, It's seems silly to throw away the opportunity to get the extra NI contributions at £164 instead of £825 if it can all be delivered legitimately.

You're just not listening are you.

If you want to pay Class 2 NI because you have started a legitimate small business (as a sole trader) then the route to do that is by registering as self employed with HMRC and completing a Self Assessment tax return.

The reason HMRC staff are confused is because you are asking for something that doesn't exist.

SusieT

Dazed_and_C0nfused said:

SusieT said:

At the moment, it reads as if your daughter and wife are self employed running the pet care business. You are retired and have nothing to do with the business.
 
If you went to work for your daughter/wife you would be employed by them, they would register as an employer with HMRC and could pay you £123 a week (or monthly equivilent) which would get you NI credits without you actually paying NI - although as you are drawing a pension I imagine you would have to pay BR tax and claim any overpayment after the end of the tax year. 

If you wanted to register as self employed and join your wife and daughter in the business which would mean working alongside them as an equal, or would mean you working for them and possibly other people as well as a freelance dog walker/sitter/cat sitter, or you could do work for yourself doing dog/cat sitting (not specfically these jobs, but using them as examples of self employment) then if you were genuinely self employed and earning money you could pay class 2 

I would agree with all of that apart from the bit in bold.  There would be no reason for there to be any repayment due.

I remembered there being a pension but missed the bit about it being £30k. If it had been under the PA there could have been a rebate, with it being £30k I agree that would not apply

Audaxer

Altior said:

If it's a ruse to extract another £8 a week from the taxpayer, that's a different story I guess. If this is a legitimate scenario, surely all that faff is not worth an extra £8 a week...

The OP is trying to establish whether what he is doing can be classed as self-employed and allow him to pay 2 years Class 2 NI contributions at £164 per year, rather than pay Class 3 NI contributions at around £800 per year.  He says the extra 2 years NI will give him an extra £10.50 per week on his State Pension to take him to the maximum forecast.  

It doesn't sound to me that he does qualify for the cheaper Class 2 NI, but even Class 3 NI is still a very good deal as he would recover that initial outlay within 3 to 4 years of receiving the State Pension, and after that it's all profit.

GrumpyDil

Whether you are employed or self employed in any given situation has been discussed many times over the years.

My thought is that may not be a can of worms you want to open by looking for a cheap way to gather a little extra state pension as if HMRC look too closely at the arrangement your wife and daughter currently operate they may consider they are employing those individuals. 

itsmeagain

Dazed_and_C0nfused said:

itsmeagain said:

Dazed_and_C0nfused said:

itsmeagain said:

Dazed_and_C0nfused said:

Also (may be obvious to you), I assume I still get the under £1k tax free trading allowance after filing the self assessment?

No, it is part of the process of completing the Self Assessment return, not something that happens after completing the return.

Apologies - I'm not talking about the timing of events. I'm asking... if I fill in the self assessment, do I still get the £1k trading allowance that I would have got if I hadn't done the self assessment. I.e, do you get the £1k trading allowance whether you do a self assessment or not?

You would probably be best looking through the paper returns on gov.uk.

Many thanks for your patience. It's not easy to find discussions on examples of people with a self employed income of less than £1k that want to do a tax return just to pay class 2 NI.

Even when you call HMRC they tell you that you a return for less than £1k but they don't know how to pay the class 2!

Having agreed to do some self employed work for them, It's seems silly to throw away the opportunity to get the extra NI contributions at £164 instead of £825 if it can all be delivered legitimately.

You're just not listening are you.

If you want to pay Class 2 NI because you have started a legitimate small business (as a sole trader) then the route to do that is by registering as self employed with HMRC and completing a Self Assessment tax return.

The reason HMRC staff are confused is because you are asking for something that doesn't exist.

Nope - must be at cross purposes.

I did call HMRC and told them the plan - (self employed, earn less than £1k and pay class 2 NI - what do I need to do)?

They told me that I don't need to do anything (no self assessment) if income below £1k but they didn't know how I pay the NI, suggesting that I could send in a covering letter and cheque to pay NI.

I've since learned from this thread and finding other HMRC links that the advice was wrong and the process that would work is - register, self assessment (even though income is less than £1k) to enable payment of class2.

itsmeagain

Altior said:

So you're fully retired, income circa £40K, and still planning to invoice your own daughter for doing her a favour and occasionally looking after somebody else's dog for her? Is it really worth all that faff, researching legislation, creating invoices and tax returns for a few quid off her? If it was me, I'd be inclined to do it gratis, or be treated to the odd meal out if you really feel the need to 'earn' out of the scenario. 

Thanks for your 'opinions' but you've missed the plot....

I've already gifted my daughter & son £100k, I've fitted a bathroom and kitchen for both, rewired, redecorated and lots more to come (for free). They'll get my £750k house eventually and probably my untouched £200k AVC/Sipp.

The pet sitting allows her to earn an extra £45 per night with paying me a pittance or maybe me earning direct from the pet owner and by-passing the partnership. I was just trying to understand the mechanics of legitimate delivery,

What a terrible father I am when she's asking me to help her and she's suggesting it.

As mentioned by others, this potentially delivers 2 years NI contributions at £164 each year instead of paying £825 per year.

That's £1320 cheaper for 2 years NI - could be worth the effort of registering & 2 tax returns.

Altior

I have no idea whether you are a good father or not. It just read to me as incredibly bizarre to be researching, and potentially going through all of this for the extremely limited upside. As you allude to, that is my opinion from what you had posted to the thread before I initially posted, others may have an alternative opinion. 

Is your primary reason for entertaining this reasonably complex workaround to earn a 'pittance' on occasion, gain an additional £8 net per week from the taxpayer, or help your daughter out with her business whilst you are enjoying your retirement. That's a rhetorical question, no need to respond. 

[Deleted User]

So you have assets of nearly one million pounds plus a decent retirement income and you are trying to avoid paying Class 3 Voluntary National Insurance contributions that you can easily afford to pay. I'm sorry but it seems rather petty and unnecessary to me.