Universal credit and class 2 NI (self employed NI)

seatbeltnoob

Hello

Please correct me if I'm wrong. But being on Universal credit automatically contributes towards your natiional insurance. So if self assessment gives you the OPTION whether to pay or not, you should pick not. Is that true?

I'm a bit confused about the NI optional payments. I will post on the tax board so as not to muddy the issue. link to tax issue here: https://forums.moneysavingexpert.com/discussion/6500999/should-i-pay-class-2-ni-or-not/p1?new=1

My main concern is contribution towards basic state pension. I want to ensure that it being met. I am a joint applicant with my partner on universal credit. Do both of us have NICs paid on our behalf?

sheramber

That question is for all self employed people. Some will not have  UC to give them NI credits so they would need to pay it voluntary  to safeguard thier state pension.

If you get credits fromUC the you do not need to pay it voluntarily.

So yes, you pick not.

seatbeltnoob

sheramber said:

That question is for all self employed people. Some will not have  UC to give them NI credits so they would need to pay it voluntary  to safeguard thier state pension.

If you get credits fromUC the you do not need to pay it voluntarily.

So yes, you pick not.

Thanks for that, I've just added some information on the OP since your reply. "My main concern is contribution towards basic state pension. I want to ensure that it being met. I am a joint applicant with my partner on universal credit. Do both of us have NICs paid on our behalf?"

Still the same answer?

poppy12345

As it's a joint claim then both of you will receive class 3 NI credits towards your state pension.

Noopin

This thread approaches my query better than others…

My partner and I had a UC account from early days, a dozen years ago.  This made sense as I was self-employed throughout that period.
As I approached 66 years old at the start of 2024, I diligently checked and topped up my NI years until I had 35 full years.  Only around £2k altogether, covering about 8 shortfall years.

I had planned to defer for a year and keep working but, as soon as I informed UC, they stopped our claim on the grounds that I couldn’t say no to the pension while continuing to receive UC payments, and receipt of SP defeated the whole claim; even though I had been able to earn modest sums, up to about £1500pcm without denting the UC payment.  I’d imagined that the SP would be added into the calculation, along with the increments for part-time carer and limited capacity for work (my partner), in the same way as my earnings had been.

It was decided that I had to repay the UC we received since the pension start date and that has been taken from my partner’s PIP.  Meanwhile, the full SP was arriving, covering the period starting on my birthday.

Yesterday, I received a letter telling me that my pension was being reduced as “HMRC have recently reconciled your records and have changed the calculation of your pension…” and “HMRC has removed several credits affecting the amounts…”

In effect, it’s lost 4 full years and dropped the pension from 229 to 203pw.  Today, I’ve spoken to DWP five times (cut off three times while they went to check something) and HMRC twice.  Eventually, the nearest that anyone would commit to an explanation was a suspicion that UC had removed some of the NI credits that they’d provided.

HMRC and I were looking at my NI record and I recognised a couple of the years that I knew I’d made up, now showing as incomplete.  The call-handler said he could see that eg.20/21 had had credits removed fairly recently.

My original questions were - who instigated the removals, and why; where did the money go to; is there any way to get back to 35 years?

It’s 16 months since I thought this was all settled and I was confident that I’d done the right thing to achieve 35 full years - I’m very unhappy that it’s come out of the blue and no-one can provide definitive answers.  I can see years where I know I paid the difference but, since the clawback, that’s now “wasted” money in terms of creating a full year because they’ve fallen below the threshold.

DWP tentatively suggested that I can still regain 3 partial years showing as “available” for voluntary payments.  But I paid up two of those at the start of 2024, and I’d still be only on 34 years.  

I feel as though I’ve fallen through a crack in the system, because the record showed 35 full years after the pension payments began.

Many thanks for getting through this, I can’t help thinking there must be others…

Dazed_and_C0nfused

Noopin said:

This thread approaches my query better than others…

My partner and I had a UC account from early days, a dozen years ago.  This made sense as I was self-employed throughout that period.
As I approached 66 years old at the start of 2024, I diligently checked and topped up my NI years until I had 35 full years.  Only around £2k altogether, covering about 8 shortfall years.

I had planned to defer for a year and keep working but, as soon as I informed UC, they stopped our claim on the grounds that I couldn’t say no to the pension while continuing to receive UC payments, and receipt of SP defeated the whole claim; even though I had been able to earn modest sums, up to about £1500pcm without denting the UC payment.  I’d imagined that the SP would be added into the calculation, along with the increments for part-time carer and limited capacity for work (my partner), in the same way as my earnings had been.

It was decided that I had to repay the UC we received since the pension start date and that has been taken from my partner’s PIP.  Meanwhile, the full SP was arriving, covering the period starting on my birthday.

Yesterday, I received a letter telling me that my pension was being reduced as “HMRC have recently reconciled your records and have changed the calculation of your pension…” and “HMRC has removed several credits affecting the amounts…”

In effect, it’s lost 4 full years and dropped the pension from 229 to 203pw.  Today, I’ve spoken to DWP five times (cut off three times while they went to check something) and HMRC twice.  Eventually, the nearest that anyone would commit to an explanation was a suspicion that UC had removed some of the NI credits that they’d provided.

HMRC and I were looking at my NI record and I recognised a couple of the years that I knew I’d made up, now showing as incomplete.  The call-handler said he could see that eg.20/21 had had credits removed fairly recently.

My original questions were - who instigated the removals, and why; where did the money go to; is there any way to get back to 35 years?

It’s 16 months since I thought this was all settled and I was confident that I’d done the right thing to achieve 35 full years - I’m very unhappy that it’s come out of the blue and no-one can provide definitive answers.  I can see years where I know I paid the difference but, since the clawback, that’s now “wasted” money in terms of creating a full year because they’ve fallen below the threshold.

DWP tentatively suggested that I can still regain 3 partial years showing as “available” for voluntary payments.  But I paid up two of those at the start of 2024, and I’d still be only on 34 years.  

I feel as though I’ve fallen through a crack in the system, because the record showed 35 full years after the pension payments began.

Many thanks for getting through this, I can’t help thinking there must be others…

I can't answer the bit about why your NI record was changed but you mention 35 years several times.

As you fall under transitional rules, not the full new State Pension rules, the 35 years aspect doesn't apply to you.  You will have your own personal number of years needed, which could be anywhere from mid twenties to over 50.  It could, by coincidence, be 35 years.

Did you check the State Pension you had already accrued and how many years you needed to reach your personal maximum of £230.25/week State Pension?

rosewalk

I would seek advice on the "removal of credits" from an advice agency such as CAB. I don't see how credits have been removed unless you were somehow credited twice at some point. I would seek a full explanation from HMRC. 

NedS

Noopin said:

This thread approaches my query better than others…

My partner and I had a UC account from early days, a dozen years ago.  This made sense as I was self-employed throughout that period.
As I approached 66 years old at the start of 2024, I diligently checked and topped up my NI years until I had 35 full years.  Only around £2k altogether, covering about 8 shortfall years.

I had planned to defer for a year and keep working but, as soon as I informed UC, they stopped our claim on the grounds that I couldn’t say no to the pension while continuing to receive UC payments, and receipt of SP defeated the whole claim; even though I had been able to earn modest sums, up to about £1500pcm without denting the UC payment.  I’d imagined that the SP would be added into the calculation, along with the increments for part-time carer and limited capacity for work (my partner), in the same way as my earnings had been.

It was decided that I had to repay the UC we received since the pension start date and that has been taken from my partner’s PIP.  Meanwhile, the full SP was arriving, covering the period starting on my birthday.

Yesterday, I received a letter telling me that my pension was being reduced as “HMRC have recently reconciled your records and have changed the calculation of your pension…” and “HMRC has removed several credits affecting the amounts…”

In effect, it’s lost 4 full years and dropped the pension from 229 to 203pw.  Today, I’ve spoken to DWP five times (cut off three times while they went to check something) and HMRC twice.  Eventually, the nearest that anyone would commit to an explanation was a suspicion that UC had removed some of the NI credits that they’d provided.

HMRC and I were looking at my NI record and I recognised a couple of the years that I knew I’d made up, now showing as incomplete.  The call-handler said he could see that eg.20/21 had had credits removed fairly recently.

My original questions were - who instigated the removals, and why; where did the money go to; is there any way to get back to 35 years?

It’s 16 months since I thought this was all settled and I was confident that I’d done the right thing to achieve 35 full years - I’m very unhappy that it’s come out of the blue and no-one can provide definitive answers.  I can see years where I know I paid the difference but, since the clawback, that’s now “wasted” money in terms of creating a full year because they’ve fallen below the threshold.

DWP tentatively suggested that I can still regain 3 partial years showing as “available” for voluntary payments.  But I paid up two of those at the start of 2024, and I’d still be only on 34 years.  

I feel as though I’ve fallen through a crack in the system, because the record showed 35 full years after the pension payments began.

Many thanks for getting through this, I can’t help thinking there must be others…

If you google, you will find there has long been an issue with DWP failing to properly make NI credits for people claiming UC due to data mismatches. Last year DWP finally did a piece of work to manually correct many thousands of UC claims on their eNIRs system. From what you have described I suspect that yours was one of those claims.

DWP would have worked back through each period for which you claimed UC and decided on a month by month if you were entitled to an NI credit for that period. To be entitled to an NI credit, you must have had a valid UC claim and must have received a UC award (payment) for that month. If for any reason there was no award (payment) for that month, maybe because your earnings were too high, or the self-employed MIF applied, then there was no entitlement to an NI credit. For the year to count towards the state pension, you must have paid sufficient NI and/or received sufficient credits.

It sounds as if DWP have worked back through your UC claim and removed some years that were previously (incorrectly?) credited. You could ask DWP to look at your claim again to ensure all periods have been correctly credited in case a mistake has been made.

I think the DWP work to correct NI credits was carried out somewhere around March/April/May 2024 but I cannot recall for sure. When did you top up your missing years? Was it before this date?