Self Employed paying Class 4 NI but receiving National Insurance credits

ab2984

From 2007- 2016 I was a stay at home parent to my 2 children (now aged 13 & 17 years) and did not work. Since 2016 I have been working part time self emlployed. My profit is over £12500 and on my self assessment I pay class 4 NI. Class 2 always shows as 0 required. However when I checked my National Insurance record its shows all my contributions as National Insurance Credits. I dont know how to amend this? I rang the HMRC help line and was basically advised to leave it which was unhelpful. I am anxious that this could be a costly mistake and am anxious to resolve it. If anyone is able to offer advice on how I sort this I would greatly appreciate it.

Dazed_and_C0nfused

ab2984 said:

From 2007- 2016 I was a stay at home parent to my 2 children (now aged 13 & 17 years) and did not work. Since 2016 I have been working part time self emlployed. My profit is over £12500 and on my self assessment I pay class 4 NI. Class 2 always shows as 0 required. However when I checked my National Insurance record its shows all my contributions as National Insurance Credits. I dont know how to amend this? I rang the HMRC help line and was basically advised to leave it which was unhelpful. I am anxious that this could be a costly mistake and am anxious to resolve it. If anyone is able to offer advice on how I sort this I would greatly appreciate it.

Did you register as self employed with HMRC?

This is a completely different thing to registering for Self Assessment because you are self employed?

The form to register as self employed is called CWF1.

Paying Class 4 NI is irrelevant for some of the more important things like qualifying years for the State Pension.  

Class 2 NI is what counts (or credits if you have these for a valid reason).

Child Benefit related credits are given until the child is 12 so it possibly more important now than it has been to get Class 2 in place (you pay it via Self Assessment).

https://www.gov.uk/national-insurance-credits/eligibility

The rules for Class 2 are a bit messy but LITRG has a useful page explaining them year by year I think.

ab2984

Thank you @Dazed_and_C0nfused this is really helpful. I think the error has come from not registering as self employed with a CWF1. Once I do this do you know if this will trigger the need to make top up payments to all the years since 2016?

QrizB

ab2984 said:

Thank you @Dazed_and_C0nfused this is really helpful. I think the error has come from not registering as self employed with a CWF1. Once I do this do you know if this will trigger the need to make top up payments to all the years since 2016?

You shave received NI credits from Child Benefit up until your youngest was 12, so you shouldn't need to top up years prior to that.

And (based on previous discussions on this forum) I think you'll only qualify for Class 2 from the date you register as self employed, with no back-dating. I could be wrong on that, though.

Dazed_and_C0nfused

ab2984 said:

Thank you @Dazed_and_C0nfused this is really helpful. I think the error has come from not registering as self employed with a CWF1. Once I do this do you know if this will trigger the need to make top up payments to all the years since 2016?

No idea sorry.  You could possible try calling HMRC (8am sharp is a recommended time to try) and see if you can register from 2023-24 onwards for Class 2 NI?

There can be time limits for paying earlier years and if you don't actually need them then maybe letting sleeping dogs lie is the prudent option here?

NB.  You original post wasn't really clear which years are/aren't covered by credits so I might oversimplifying things a little.

QrizB

Not wishing to confuse matters further, this webpage says you only need a CWF1 if you can't register online:

https://www.gov.uk/register-for-self-assessment/y/you-re-self-employed-for-example-a-sole-trader/yes

Dazed_and_C0nfused

QrizB said:

Not wishing to confuse matters further, this webpage says you only need a CWF1 if you can't register online:

https://www.gov.uk/register-for-self-assessment/y/you-re-self-employed-for-example-a-sole-trader/yes

Fair point, I guess I'm just thinking of that as the online version of a CWF1.

Key thing is to be registered as self employed, as well as for Self Assessment.

ab2984

Dazed_and_C0nfused said:

ab2984 said:

Thank you @Dazed_and_C0nfused this is really helpful. I think the error has come from not registering as self employed with a CWF1. Once I do this do you know if this will trigger the need to make top up payments to all the years since 2016?

No idea sorry.  You could possible try calling HMRC (8am sharp is a recommended time to try) and see if you can register from 2023-24 onwards for Class 2 NI?

There can be time limits for paying earlier years and if you don't actually need them then maybe letting sleeping dogs lie is the prudent option here?

NB.  You original post wasn't really clear which years are/aren't covered by credits so I might oversimplifying things a little.

The NI Credits are from 2017-2024.

ab2984

So I should now register online as self employed. The form asks what date did I start working as self employed- my concern is will this trigger a massive bill to back pay from 2017.