Class 2 or Class 3 confusion: What is HMRC up to?!?

Sumarokov

I am trying to pay voluntary NI contributions for the missing years 2006 to 2016. After graduating from university back in 1993 I lived abroad and still do, despite a brief return to working in UK from 2017-2020. I am self-employed and was self-employed since 2010 (bar 2017-19).

I have been corresponding with HMRC ever since this was first announced years ago and usually had to wait a whole year for a letter to be answered. I believe that I should only pay Class 2 contributions and I got a letter in April 2024 to say that I could. But then in May I got a follow-up letter saying not to send anything until I answer six more questions.

Are they trying to get me to pay in Class 3 contributions instead? The six questions are:

1. Exact date I briefly returned to UK in 2016/17

2. Month and year of all university education

3. Employers in UK when I was at university and worked part-time

4. Employers/self-employed business when abroad

5. Type of work I did while employed/self-employed abroad

6. If I do not meet the conditions to pay Class 2, do I want them to process CF83 to start paying Class 3 voluntary contributions as of now?

I am also being asked to send proof of my current employment/self-employment abroad.

I am trying to understand what HMRC is actually after. Are they trying to get me to provide evidence so that they can row back on the April letter of Class 2 and make me pay more (Class 3) for the missing years?

I understand I probably need to provide a bit more information here, but I would be interested to get a bit more insight on the workings of HMRC from someone who has had the same/similar experience. They seem to be making things so hard for everyone in general with these voluntary contributions, that I cannot help thinking everything is being done with an ulterior motive...

Inbetweeners

Have you read the qualifying criteria for paying Class 2 in your situation. Based on what you have said you don't meet the conditions for Class 2 for 2006 to 2016 as you were not working in the UK immediately before leaving ( the first time)

molerat

Inbetweeners said:

Have you read the qualifying criteria for paying Class 2 in your situation. Based on what you have said you don't meet the conditions for Class 2 for 2006 to 2016 as you were not working in the UK immediately before leaving ( the first time)

Agreed, this may be the stumbling point.  You are not entitled to pay class 2 purely on the point of previously living in UK and now working overseas.  https://www.gov.uk/guidance/apply-to-pay-voluntary-national-insurance-contributions-when-abroad-cf83

Sumarokov

I was not working full-time, just in parallel to my university time, i.e. from 1989 to 1993.

Summer work (1989, 1993) and, then, 3 hours a day in term-time (1990-91).

So would it need to have been full-time? 

p00hsticks

Sumarokov said:

I was not working full-time, just in parallel to my university time, i.e. from 1989 to 1993.

Summer work (1989, 1993) and, then, 3 hours a day in term-time (1990-91).

So would it need to have been full-time? 

Not necessarily full time ,but probably sufficient to have been making a certain amount of NI payments for the years in question. 

Sumarokov

p00hsticks said:

Not necessarily full time ,but probably sufficient to have been making a certain amount of NI payments for the years in question. 

I am pretty sure I paid NI contributions from working 3 hours a day in 1990-91, while also being a student... but my record is "empty year".

JoeCrystal

Did you pay enough NI contributions overall to get the year though?

pinnks

To be eligible to pay any Class of voluntary NI when abroad you need to have either lived for 3 consecutive years in the UK or paid NI for 3 full years.  I assume you meet the first of those conditions, so would be able to pay either Class 2 or 3.

The key criterion for paying Class 2 is that you were "ordinarily an employed earner" until immediately before you left the UK (for the last time).  It seems you have two "leaving the UKs" to consider.

The first of those is after you finished at uni.  HMRC will base its decision on your working history but whether a few hours a week and a few weeks each summer meet that criterion is, in my view, questionable.  I had s similar history at uni, as I am sure, did many, and left immediately after graduation to work in the EU.  Voluntary payments while I was abroad are not relevant for me but I have concluded that if I were submitting a CF83, the answer for me would be, sorry but it's Class 3 old chap.  HMRC is seeking to answer that question for you for the years 2006/07 until you returned to the UK.

You then left the UK again and need to meet the criteria all over again for the year in which you left and all future years.  HMRC therefore needs to establish whether you were ordinarily an employed earner in the UK until you left again.  If you were then Class 2 should be available.

And then for both periods, HMRC needs to be satisfied for every week you want to pay Class 2 that you were, in essence, an ordinarily employed earner abroad.  If you were then you would get Class 2 for that week; if not, then that week would be Class 3.  You could end up with a mix of Class 2 and 3 for various years, or for a single year being part and part.

This is a wholly fact-based decision process.  It's not about trying to make you pay one Class or another.