Changes in Circumstances and Voluntary NI Contributions

David_Watts2

I'd appreciate a sense check of, and any advice on, the following. Until now, my post-employment tax situation has been very simple. There have been two considerations, how much taxable interest I have earned in the year and how much I decide to draw down from my pension every March. The amount I have chosen to take is basically whatever remains of my overall tax allowance (Personal Allowance plus savings starter rate and PSA). So last tax year, with interest of around £7k, I drew £11k and no tax was payable.

This year, with increased interest rates applying, those figures are likely to flip so £11k interest will leave me able to draw £7k pension without going over the limit. That means I will have to register for self assessment, the deadline for doing so being October next year. My tax code is 1100L and the estimated pension income is £11k. I can amend that estimate in my tax account.

I am also considering taking on a small part time role where I would earn around £1200 per year as a freelance contractor so this would oblige me to register for self assessment (as self employed) even in the absence of the increased amount of interest. The deadline for registering would still be October of next year.

Taking on that role will make me eligible to pay voluntary class 2 NI contributions which will be useful as I need another 6 years of contributions to get the maximum State Pension. (After 33 years of employment I was 6 years short when taking redundancy due to being contracted out and I have 10 more years in which I can contribute.) I can make those payments as part of the self assessment process.

Is anything above incorrect or have I missed anything important? When would be the optimum time to register as self employed? Right away or until after the end of the current tax year. (Presumably best not to leave it until the October deadline.)

Dazed_and_C0nfused

You might as well register once you have received £1k in turnover.

You're completely correct about not waiting until the last minute to register.