New National Insurance Guidelines 6/1/24

Sidby

I am self employed and this year my earnings were less than £12570, therefore I pay no tax and no NI. My question is Do the HMRC pay my National Insurance for the year as a credit and how does it show in my NI contributions on my HMRC account 
I need to pay 2 more years NI to get my full Government pension 

BoGoF

The changes from 6 January 2024 are for employees only. The changes to NIC for self-employed don't take effect until 6 April 2024. Therefore if you want 23/24 to be a qualifying year you will need to voluntarily pay Class 2 NIC.

molerat

With effect from the 22-23 tax year if your profits are between the SPT and the LPL you will be treated as though you had paid class 2.  This should show on your NI record as a full year with no contributions made as does the current class 1 for the employed earning above the LEL

The only change to class 2 from April 2024 is that compulsory class 2 is abolished.  This has no effect on those between the 2 thresholds who will be treated as if they had paid and those below the SPT who will still need to pay class 2 voluntarily if they want to maintain their pension entitlement.

Johnjdc

How will this work for people who are primarily employed, but also fill in a self-assessment for other reasons - will it simply assume that the NI payments which happened through PAYE were correct or, when completing / confirming the income section, will there be a box for "before 6th Jan" and a box for "after 6th Jan"?

Dazed_and_C0nfused

Johnjdc said:

How will this work for people who are primarily employed, but also fill in a self-assessment for other reasons - will it simply assume that the NI payments which happened through PAYE were correct or, when completing / confirming the income section, will there be a box for "before 6th Jan" and a box for "after 6th Jan"?

There is no requirement for employees to provide details of NI deduction on their Self Assessment.

Johnjdc

Dazed_and_C0nfused said:

Johnjdc said:

How will this work for people who are primarily employed, but also fill in a self-assessment for other reasons - will it simply assume that the NI payments which happened through PAYE were correct or, when completing / confirming the income section, will there be a box for "before 6th Jan" and a box for "after 6th Jan"?

There is no requirement for employees to provide details of NI deduction on their Self Assessment.

No, sure, but there's a requirement to confirm your income and if that's wrong, then the timing of the correct totals becomes relevant, doesn't it? I don't think it's likely to affect me but if it had been a year earlier, it would - my former employer recorded all my redundancy payment / pay in lieu of notice, etc, above the £30k limit as salary.

For the pay in lieu notice this makes no difference to anything, but for the portion which is redundancy, it meant I paid employee NICs on something which I shouldn't have. 

Since I have been unable to get it corrected at source, I've now created a chaotic self-assessment in trying to disentangle it (alongside all the other reasons my tax return is chaos) - essentially by reducing my stated income from that employment to my actual income plus pay in lieu, and adding the portion which was redundancy over 30k to my "other income" section - to ensure I pay the right income tax, but not the unrequired NIC.

Hopefully that's a reasonable approach, though HMRC are of course entitled to challenge me on whether the redundancy payment was contractual or compensatory (it was contractual). 

My hypothetical question is, if for 2023/24 someone in the same position said "actually my income wasn't what you thought it was, my income was this", then to calculate the correct NIC total on my self-assessment, HMRC would need to know what proportion of the NICable income was before 6th Jan and which was after it.