Question, Question, Question, Question

DhwERbf689

Question, Question, Question, Question

molerat

The NI record only shows class 3 costs whatever your eligibility. You need to speak to HMRC to decide which class of contributions you are eligible to pay for any particular year, it can be fairly complex as for some years if you failed to register for class 2 even though self employed you may not be eligible to pay.  Which tax year do you reach state retirement and what do you intend doing up to then as it looks like you need another 24 years to get to the max ?  There are obviously some easy wins in that pile which seem to be before your SE - which tax year did you start in ?.  The big problem though is you are up against the April cut off clock which will make all years 2018-19 and earlier no longer available.

Dazed_and_C0nfused

Is it possible that you registered for Self Assessment with HMRC.  But didn't register as self employed with HMRC?

Class 2 NI, which is far cheaper than Class 3, is usually paid as part of your Self Assessment liability but only when you are registered as self employed.

You can ignore Class 4, that has no relevance for State Pension purposes.

molerat

You need to tell HMRC you are self employed and they should then be able to tell you what you need to pay.  You should be safe for class 2 eligibility for the years 20-21 onwards, 13-14 could be problematic on that score, 06-07, 08-09 and 09-10 are cheap class 3 so that makes 7 leaving 17 needed with 28 or so left to get there.

So I had to register specifically for something at some point? How is that done?

https://www.gov.uk/pay-class-2-national-insurance

For 23-24 if your profits are more than £6725 but less that £12570 you will be credited with class 2 without needing to pay, above £12570 you will need to pay.  From 24-25 if your profits are above £6725 you will be credited with no need to pay.
https://www.att.org.uk/technical/news/class-2-national-insurance-whats-changing-april-2024

Why is this a problem? April is a while away yet and I plan to pay this week.

The phone lines are getting very busy due to this impending cut off and people are reporting holding for a long time and getting cut off.  You may also need to speak to DWP before HMRC will allow you to pay, another long hold.  No doubt Martin will be mentioning it again which has previously made the website fall over and the phone lines absolutely swamped.  

https://www.bbc.co.uk/news/articles/cn4zjnd2llyo

HMRC has denied running a "deliberately poor" phone service in an attempt to push taxpayers to seek help online instead.

Nearly 44,000 customers were cut off without warning after being on hold for more than an hour last year, a report by a committee of MPs found.

It warned HMRC's service had got even worse since then and urged the tax authority to take responsibility for failing its customers.

QrizB

DhwERbf689 said:

 I pay my self assesment online every year via the HMRC website

Do you complete the pages for self-employment? If you do, you'll see there's a tick box for paying voluntary Class 2 contributions in the event that you've not earned enough to get to the LEL (that £6725 number quoted above).

Have you not noticed it?

How much did you make in 23/24? If you look at your tax return for 23/24, can you find that box?

Dazed_and_C0nfused

DhwERbf689 said:

Dazed_and_C0nfused said:

Is it possible that you registered for Self Assessment with HMRC.  But didn't register as self employed with HMRC?

Class 2 NI, which is far cheaper than Class 3, is usually paid as part of your Self Assessment liability but only when you are registered as self employed.

You can ignore Class 4, that has no relevance for State Pension purposes.

You're saying I may have not been registered as self employed all this time with HMRC? Why would I be submitting a self assesment every year and manually paying my taxes if I wasn't self employed?

Surely those things are one and the same?

I pay my self assesment online every year via the HMRC website so I obviously registered that I was self employed all those years ago but I don't specifically recall registering FOR CLASS 2 CONTRIBUTIONS is what I was saying.

Is that something you have to register for seperately?

The current situation is that you have to register both for Self Assessment and as self employed. 

If you don't register as self employed one of the problems that occurs is you don't get the option to pay Class 2 as part of your Self Assessment liability.  You would still be charged Class 4 NI (if your profits are large enough) but that doesn't count for State Pension purposes.

https://www.gov.uk/register-for-self-assessment/y/you-re-self-employed-for-example-a-sole-trader/no-i-m-registering-for-the-first-time

Dazed_and_C0nfused

DhwERbf689 said:

If you don't register as self employed one of the problems that occurs is you don't get the option to pay Class 2 as part of your Self Assessment liability.  You would still be charged Class 4 NI (if your profits are large enough) but that doesn't count for State Pension purposes.

So there's a situation here where for the last 10 years I've been paying, on the years where I've earned enough money, contributions that do not count towards the state pension?

If so, what do they count towards?

I'm so bamboozled right now.

Class 4 NI is often considered an extra tax.

https://www.litrg.org.uk/working/self-employment/nic-self-employed#5

squirrelpie

It sounds like you should ask your accountant what he has paid for NICs for the past years.

Read the link Dazed_and_Confused posted or ask your accountant if you want to understand more about Class 4.

QrizB

DhwERbf689 said:

But looking at each self assesment I do have for tax years 2016, 2017, 2018, 2019, and 2020 they have a section for both "Class 4 NICs due" and "Class 2 NICs due" and both have different numbers in them then there's a "Pension charges due" box a couple of lines down and this is always blank.
What does this all mean? 

If you earn more than the Small Profits Threshold (currently £6725pa) you pay Class 2. This is a fixed amount per week. It's the Class 2 NI that qualifies you for the State Pension.

If you earn more than the Lower Profits Limit (currently £12570pa) you also pay Class 4. This is a percentage.

I can't help with the "pension charges due" box, my wife's the self-employed one and I don't recall seeing that on her tax account. Sorry.

Gov page with thresholds and rates for recent years:
https://www.gov.uk/government/publications/rates-and-allowances-national-insurance-contributions/rates-and-allowances-national-insurance-contributions

To be honest I agree with @squirrelpie above; you've got an accountant, and presumably you pay them. They should be able to explain what NI you're paying and why HMRC don't think you've paid enough to qualify for State Pension for the past decade. (Mrs QrizB doesn't have an accountant and we do hers ourselves. So far so good.)

Dazed_and_C0nfused

DhwERbf689 said:

Class 4 NI is often considered an extra tax.

What does that mean? I'm sorry I do not understand.

Literally what it says.  Class 4 National Insurance is simply an extra amount that you have to pay of your business profits are above the relevant threshold.

Class 4 National Insurance isn't relevant for State Pension purposes and doesn't give you an entitlement to any other benefits.

Dazed_and_C0nfused

DhwERbf689 said:

For some reason I can't find copies of my self assesments for recent years on my laptop and the archaic HMRC website just seems to send me round in a loop and I can never find ANYTHING on it.

But looking at each self assesment I do have for tax years 2016, 2017, 2018, 2019, and 2020 they have a section for both "Class 4 NICs due" and "Class 2 NICs due" and both have different numbers in them then there's a "Pension charges due" box a couple of lines down and this is always blank.

What does this all mean? 

Class 4 NI is just part of your Self Assessment calculation, it isn't relevant as far as your State Pension is concerned.

Class 2 NI is important for State Pension purposes and qives you qualifying years.

"Pension charges due" is probably a charge that can be imposed if you exceed the annual allowance for pension contributions.  It has nothing whatsoever to do with National Insurance or qualifying years for State Pension purposes.

What values were in the Class 2 section?

You need to check your Self Assessment account to see if HMRC changed this part of your calculation?  This can happen when you aren't registered as self employed. 

The fact that you have completed a Self employment page on your return isn't enough, you have to be registered as self employed as well.  HMRC are known to change your calculation to remove the Class 2 NI element if you aren't registered as self employed.

It does beg the question as to what you are paying your accountant for, they should normally be helping you with this.  Subject to what is in your letter of engagement of course.