Self Employed options for making NI Contributions

molerat

DRS1 said:

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.

Or just answer the following and get the answer a lot quicker than hanging on the phone to FPC

Current weekly £££.pp amount accrued up to April 2024.
Number of full NI years 15-16 and earlier
Number of full NI years 16-17 and later
Tax year you reach state retirement
Any COPE amount.  If you have "You've been in a contracted-out pension scheme" on your forecast then click
here https://www.tax.service.gov.uk/check-your-state-pension/account/cope whilst logged into your tax account
Years which show not full and prices

DRS1

molerat said:

DRS1 said:

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.

Or just answer the following and get the answer a lot quicker than hanging on the phone to FPC

Current weekly £££.pp amount accrued up to April 2024.
Number of full NI years 15-16 and earlier
Number of full NI years 16-17 and later
Tax year you reach state retirement
Any COPE amount.  If you have "You've been in a contracted-out pension scheme" on your forecast then click
here https://www.tax.service.gov.uk/check-your-state-pension/account/cope whilst logged into your tax account
Years which show not full and prices

I don't want to derail this thread but may I ask why you ask about the COPE amount?  I have seen other threads where people are told not to worry about the COPE amount because it does not reduce the stated amount of State Pension.  It simply tells you what you may get from the pension scheme you used to contract out of SERPS.

Presumably it impacts on the calculation of the pre 2016 pension in some way (you don't get as much additional state pension?)

molerat

DRS1 said:
Presumably it impacts on the calculation of the pre 2016 pension in some way (you don't get as much additional state pension?)

Not quite correct but it is one of the deciding factors as to if purchasing pre 2016 years is viable.

fcjf

molerat said:

DRS1 said:

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.

Or just answer the following and get the answer a lot quicker than hanging on the phone to FPC

Current weekly £££.pp amount accrued up to April 2024.
Number of full NI years 15-16 and earlier
Number of full NI years 16-17 and later
Tax year you reach state retirement
Any COPE amount.  If you have "You've been in a contracted-out pension scheme" on your forecast then click
here https://www.tax.service.gov.uk/check-your-state-pension/account/cope whilst logged into your tax account
Years which show not full and prices

Or just answer the following and get the answer a lot quicker than hanging on the phone to FPC

Current weekly £££.pp amount accrued up to April 2024: 175.58 / week 
Number of full NI years 15-16 and earlier: 21
Number of full NI years 16-17 and later: 7 although there is a note against 2016-17 as screenshot below.



Tax year you reach state retirement: 2038-39
Any COPE amount.  If you have "You've been in a contracted-out pension scheme" on your forecast then click
here https://www.tax.service.gov.uk/check-your-state-pension/account/cope whilst logged into your tax account. COPE Estimate £2.84 / week
Years which show not full and prices. See screenshot below.
 

So to me it seems an easy choice of paying £3233.40 for 4 years credits that would cost more in the future if she needs to pay class 3, that's as long as paying for the 4 years increases the SP of course, how do I find that out?

molerat

She is currently £45.62 short of the full pension.  That will need (7.2) 8 full years to fill.  She can safely fill those 4 pre 2016 years as they will all add value and take her to £198.20 - as her starting amount is based on the old system a pre 2016 year adds £5.65 rather than £6.32 (although buying those 4 actually flips her starting amount to the new system but with only 2p benefit) - leaving her £23.00 short and needing (3.6) 4 full years to fill. She has 14 years to get the necessary 8 so only you can decide if it is worth the gamble of buying past years with the risk of stepping in front of a bus where all is lost or filling in future with some SE class 2 and class 3 or maybe even from benefits of some sort.  You could always tuck that £3233.40 away somewhere safe and see how it pans out in the future.  A class 3 is £907.40 this year, £923.00 next and increasing with CPI each year. 16-17 generally shows that statement when the person is registered SE but has not paid class 2.  That will not get sorted until the final reconciliation so if she thinks she is entitled to class 2 then contact HMRC as that would be an easy win for a mere £179.40.

DRS1

I do wonder why 2016/7 is still being checked 8 years later.  Presumably this was when she started being self employed?  If it is going to be full then great - one less year to fill later but if it is only part filled then it may be a cheaper year to fill than any future years when she may not be working or getting NI credits. 

Perhaps @molerat knows why that sort of message appears.

fcjf

molerat said:

She is currently £45.62 short of the full pension.  That will need (7.2) 8 full years to fill.  She can safely fill those 4 pre 2016 years as they will all add value and take her to £198.20 - as her starting amount is based on the old system a pre 2016 year adds £5.65 rather than £6.32 (although buying those 4 actually flips her starting amount to the new system but with only 2p benefit) - leaving her £23.00 short and needing (3.6) 4 full years to fill. She has 14 years to get the necessary 8 so only you can decide if it is worth the gamble of buying past years with the risk of stepping in front of a bus where all is lost or filling in future with some SE class 2 and class 3 or maybe even from benefits of some sort.  You could always tuck that £3233.40 away somewhere safe and see how it pans out in the future.  A class 3 is £907.40 this year, £923.00 next and increasing with CPI each year. 16-17 generally shows that statement when the person is registered SE but has not paid class 2.  That will not get sorted until the final reconciliation so if she thinks she is entitled to class 2 then contact HMRC as that would be an easy win for a mere £179.40.

Thank you for the very informative response.

I think there's a lot to be said for paying for the 4 years now and removing the pressure of needing to fill the gaps in the future so we can plan our retirement with a bit more certainty but then again if she can fill future gaps with Class 2 it will be a lot cheaper but that would mean her carrying on working for longer which is not the plan.

fcjf

DRS1 said:

I do wonder why 2016/7 is still being checked 8 years later.  Presumably this was when she started being self employed?  If it is going to be full then great - one less year to fill later but if it is only part filled then it may be a cheaper year to fill than any future years when she may not be working or getting NI credits. 

Perhaps @molerat knows why that sort of message appears.

Yes, she started her self employment on 21 April 2016. It's a bit strange that they're still checking, I'll need to get in the loft and dig out the accounts from that year and see if they were paid but then again if they were I'm not sure what there'd be to check.

DRS1

Did she do a tax return for 2016/7 or not until 2017/8?  Might that have something to do with it?

fcjf

DRS1 said:

Did she do a tax return for 2016/7 or not until 2017/8?  Might that have something to do with it?

Yes, she definitely would have, she has BTL income so there would definitely have been a SA return for 2016-17.