Self Employed options for making NI Contributions

fcjf

My wife is 53 and a self employed hairdresser. 

She needs another 8 years contributions before obtaining the full £221.20.

There are 4 available years she can fill the gaps from 2013 - 2016 at a cost of £3296.80.

Her current net profits are in the region of £22,000 and she is paying voluntary NI contributions however we will most likely be both retiring in 15 months or so, so without filling the gaps, at retirement she will be 6 years short of the full amount. From 2026 (when retiring from work but clearly a long way off SPA) can my wife still make voluntary contributions without an income or even by doing some minimal self employed work or is there a minimum income before Voluntary contributions can be made or should we just bite the bullet and pay for the available 4 gap years now?

molerat

If she is genuinely carrying out self employed work she can continue to pay class 2 contributions otherwise she would need to pay class 3.

Dazed_and_C0nfused

fcjf said:

My wife is 53 and a self employed hairdresser. 

She needs another 8 years contributions before obtaining the full £221.20.

There are 4 available years she can fill the gaps from 2013 - 2016 at a cost of £3296.80.

Her current net profits are in the region of £22,000 and she is paying voluntary NI contributions however we will most likely be both retiring in 15 months or so, so without filling the gaps, at retirement she will be 6 years short of the full amount. From 2026 (when retiring from work but clearly a long way off SPA) can my wife still make voluntary contributions without an income or even by doing some minimal self employed work or is there a minimum income before Voluntary contributions can be made or should we just bite the bullet and pay for the available 4 gap years now?

Are your years correct?

If she needs another 8 and will be self employed until (roughly) the end of the 2025-26 tax year then won't she be adding 3 more, over and above what she already has 🤔

And how much will 7 years take her to?

Irrespective of that I cannot see any reason why she couldn't pay voluntary (Class 3) contributions for tax years that are after the tax year her self employment ends.

squirrelpie

I'm surprised nobody has mentioned the difference between filling years before 2016 and afterwards?

fcjf

Dazed_and_C0nfused said:

fcjf said:

My wife is 53 and a self employed hairdresser. 

She needs another 8 years contributions before obtaining the full £221.20.

There are 4 available years she can fill the gaps from 2013 - 2016 at a cost of £3296.80.

Her current net profits are in the region of £22,000 and she is paying voluntary NI contributions however we will most likely be both retiring in 15 months or so, so without filling the gaps, at retirement she will be 6 years short of the full amount. From 2026 (when retiring from work but clearly a long way off SPA) can my wife still make voluntary contributions without an income or even by doing some minimal self employed work or is there a minimum income before Voluntary contributions can be made or should we just bite the bullet and pay for the available 4 gap years now?

Are your years correct?

If she needs another 8 and will be self employed until (roughly) the end of the 2025-26 tax year then won't she be adding 3 more, over and above what she already has 🤔

And how much will 7 years take her to?

Irrespective of that I cannot see any reason why she couldn't pay voluntary (Class 3) contributions for tax years that are after the tax year her self employment ends.

I think the years are correct, the estimate is based on her NI record up to 5 April 2024 so once 2024-25 & 2025-26 are filled this will leave 6 years to fill or have I missed something?

fcjf

molerat said:

If she is genuinely carrying out self employed work she can continue to pay class 2 contributions otherwise she would need to pay class 3.

She has said that she will probably still do close friends and very long term clients once she has stopped her current  3 full days a week but this may only be less than £2000 income per year, would this still be classed as being self employed? If she then changed and only did very occasional work that I guess most people wouldn't even declare so only a few hundred a year, if she included this on her SA return would this still allow her to contribute just the flat rate Class 2. Not looking to buck the system here just want to understand whether it makes sense to fill the gaps now at a cheaper rate than current Class 3 rates. I guess there is the backstop of paying class 3 in future but as always no one knows what future legislation may change the current rules.  

Dazed_and_C0nfused

fcjf said:

Dazed_and_C0nfused said:

fcjf said:

My wife is 53 and a self employed hairdresser. 

She needs another 8 years contributions before obtaining the full £221.20.

There are 4 available years she can fill the gaps from 2013 - 2016 at a cost of £3296.80.

Her current net profits are in the region of £22,000 and she is paying voluntary NI contributions however we will most likely be both retiring in 15 months or so, so without filling the gaps, at retirement she will be 6 years short of the full amount. From 2026 (when retiring from work but clearly a long way off SPA) can my wife still make voluntary contributions without an income or even by doing some minimal self employed work or is there a minimum income before Voluntary contributions can be made or should we just bite the bullet and pay for the available 4 gap years now?

Are your years correct?

If she needs another 8 and will be self employed until (roughly) the end of the 2025-26 tax year then won't she be adding 3 more, over and above what she already has 🤔

And how much will 7 years take her to?

Irrespective of that I cannot see any reason why she couldn't pay voluntary (Class 3) contributions for tax years that are after the tax year her self employment ends.

I think the years are correct, the estimate is based on her NI record up to 5 April 2024 so once 2024-25 & 2025-26 are filled this will leave 6 years to fill or have I missed something?

Her State Pension record will no doubt say that but what is the specific status of the 2023-24 year on her NI record?

Given the SA filing deadline isn't until 31 January I'm surprised that year has been finalised yet (for NI purposes).

QrizB

fcjf said:

molerat said:

If she is genuinely carrying out self employed work she can continue to pay class 2 contributions otherwise she would need to pay class 3.

She has said that she will probably still do close friends and very long term clients once she has stopped her current  3 full days a week but this may only be less than £2000 income per year, would this still be classed as being self employed?

I'd consider that to be self-employment, requiring SA and qualifying for Class 2 NI.

But I'm not a tax inspector

fcjf

Dazed_and_C0nfused said:

Her State Pension record will no doubt say that but what is the specific status of the 2023-24 year on her NI record?

Given the SA filing deadline isn't until 31 January I'm surprised that year has been finalised yet (for NI purposes).

This is screenshot from her NI record

Blue_Butterfly

I started a small self employment/paid hobby in September 2022 earning approximately £2000 PA. HMRC require you to do self assessment if your takings (not profit) exceed £1000. You can either claim £1000 Trading Allowance or your actual expenses (if they are greater than £1000) against your tax bill. I was given the opportunity to pay voluntary class 2 NI as part of the SA process, but didn't need it in 22-23. I also got the offer to pay for some of 23-24, the year I reached SPA which would not have added to my SP even if I had been below the maximum! Class 2 NI is much cheaper than Class 3.

DRS1

fcjf said:

Dazed_and_C0nfused said:

fcjf said:

My wife is 53 and a self employed hairdresser. 

She needs another 8 years contributions before obtaining the full £221.20.

There are 4 available years she can fill the gaps from 2013 - 2016 at a cost of £3296.80.

Her current net profits are in the region of £22,000 and she is paying voluntary NI contributions however we will most likely be both retiring in 15 months or so, so without filling the gaps, at retirement she will be 6 years short of the full amount. From 2026 (when retiring from work but clearly a long way off SPA) can my wife still make voluntary contributions without an income or even by doing some minimal self employed work or is there a minimum income before Voluntary contributions can be made or should we just bite the bullet and pay for the available 4 gap years now?

Are your years correct?

If she needs another 8 and will be self employed until (roughly) the end of the 2025-26 tax year then won't she be adding 3 more, over and above what she already has 🤔

And how much will 7 years take her to?

Irrespective of that I cannot see any reason why she couldn't pay voluntary (Class 3) contributions for tax years that are after the tax year her self employment ends.

I think the years are correct, the estimate is based on her NI record up to 5 April 2024 so once 2024-25 & 2025-26 are filled this will leave 6 years to fill or have I missed something?

It would be worth asking The Future Pension Centre if contributing for the pre 2016 years will add to her State Pension.  Sometimes it will and sometimes it won't.  The phone number is 0800 731 0175

There is an unfilled year for 2016/7 which may make sense to fill but again you can ask FPC.

I know there is a deadline for doing pre 2016 years but you don't want to do them if they don't add anything.