Voluntary national insurance contributions - Abroad. Class 3 or 2

maullwurff

I am in the process of submitting the form CF83 online. 
Concerning Class 2 or 3 I have read here and elsewhere that you have to have been employed or self-employed immediately before leaving the UK.

I graduated in the summer of 1986.
I spent the next months looking for work in the UK (difficult times) - and used the local careers office for many times for advice.
I left the UK in Sept. 1986 (to the EU) looking for work and became fully employed there (Germany) in Nov. 1986.

My question is - does the forum think this record would be seen as "employed or self-employed immediately". I saw somewhere(?) that if you tick jobseekers allowance and can provide proof of jobsearching then this is the case (jobseekers did not exist in 1986). 

Also, as this was 1986, does anyone have any idea "how much" proof I would need to present. Do careers offices still exist in any form, would they have such old records?

Any hints greatly appreciated.

maullwurff

Just to make clear:
"Concerning Class 2 or 3 I have read here and elsewhere that you have to have been employed or self-employed immediately before leaving the UK (for Class 2)"

QrizB

I haave no actual information on this but would imagine that they would look to see if you were paying NI, or receiving UB-related NI credits, immediately prior to leaving.

1957DfurdPensionist

QrizB said:

I haave no actual information on this but would imagine that they would look to see if you were paying NI, or receiving UB-related NI credits, immediately prior to leaving.

maullwurff have worked abroad subsequently i.e. yes you didn't start immediately you left, but in your case I would argue that any detriment to the UK state was de minimis because you did start working in Germany pretty damned fast as a recent graduate!  You did not wait in UK to join the ranks of the longterm unemployed!  Have you managed to continue working fairly consistently in Germany up through the past 20 years which will include the years for which you have NI gaps of course?  I imagine years for which you can show German payslips since 2016 are perhaps particularly useful.

I think unlike at home, UK HMRC are obliged to a large extent to take on board some EU ideas of Equal rights when it comes to whether you qualify to pay the reduced Class2 rather than Class3.  EU's equality ideas mean they do not believe that self employed workers should be treated so differently from salaried workers in regards such as this.

Did you by any chance create or retain any links with UK e.g. property ownership whilst you have been in Germany?  These may lend some credence that you were dual resident for some periods should the subject come up and work in your favour.  It might possibly then be arguable that your "UK leaving date" was much later.  In the Ryanair / EasyJet ages, large numbers of us are leaving UK and arriving back again at quite a high frequency each year 

However, I would say it is definitely worth lengthy discussions with someone senior at HMRC to discuss your case.  I would like to think they would decide in your favour to allow you to fill in the maximum number of worthwhile gaps (those that maximise your future entitlement to new State Pension I imagine are what you are concerned about), and at the Class2 rate.

In my experience HMRC senior caseworkers can be quite understanding of modern lifestyle mobility decisions.

Bostonerimus1

I was a recent graduate back in the mid 1980s when I left for work in the USA. The rules were slightly different for paying Class 2 back then and the old NI38 says you could also qualify if "you would normally be employed or self-employed, but were unemployed immediately before you went abroad." So if you are applying based on a leaving date back in the 1980s would HMRC use the rules from back then? Maybe, maybe not, but it's worth asking.

pinnks

I am not sure the law was different back in the 1980s.  The current regulations from 2001 (as amended) use almost identical language to that found in the predecessor regulations dating from 1979, and neither make any reference to periods of unemployment. 

But that said, HMRC have stated on their customer forum that periods of unemployment while seeking employment can count towards the statutory requirement of, "immediately before he last left Great Britain or Northern Ireland (as the case may be), he was ordinarily an employed earner or a self-employed earner".  They have also said they look for patterns of employment before the person leaves the UK, which is basically what you say was in a previous NI38. 

But how can one be, as you say, "normally be employed or self-employed" such that periods of unemployment before you leave the UK can be taken into account, if you were, as a matter of fact, not employed before being unemployed because you were, and always had been, in full-time education?

So, whether HMRC would consider a period of 3 months between finishing full-time education and leaving the country as "ordinarily", or "normally", in the context of being employed is moot, and it will be interesting to learn what they decide in this case.

What is irrelevant is the suggested EU angle, as is the question of when the person commenced employment, or self-employment abroad, because to be able to pay Class 2 you need to first meet the "immediately before" condition and only then can you consider whether, for a particular week, the person can pay Class 2 because they are working abroad, or whether they still have to pay at Class 3 because they were not working. It is perfectly possible to get a mix of Class 2 and Class 3 years and a year that comprises a mix of Class 2 and 3.

The "immediately before" test is a one-off test.  If the condition is met, the Class 2 door is forever "open", and one then considers the working abroad condition; fail that test and the "door" is forever "closed" unless said person returns to the UK and then leaves again, at which time the test has to be done again - the regulation requires the test to be done by reference to when the person "last left" the UK.

   

Bostonerimus1

pinnks said:

I am not sure the law was different back in the 1980s.  The current regulations from 2001 (as amended) use almost identical language to that found in the predecessor regulations dating from 1979, and neither make any reference to periods of unemployment. 

But that said, HMRC have stated on their customer forum that periods of unemployment while seeking employment can count towards the statutory requirement of, "immediately before he last left Great Britain or Northern Ireland (as the case may be), he was ordinarily an employed earner or a self-employed earner".  They have also said they look for patterns of employment before the person leaves the UK, which is basically what you say was in a previous NI38. 

But how can one be, as you say, "normally be employed or self-employed" such that periods of unemployment before you leave the UK can be taken into account, if you were, as a matter of fact, not employed before being unemployed because you were, and always had been, in full-time education?

So, whether HMRC would consider a period of 3 months between finishing full-time education and leaving the country as "ordinarily", or "normally", in the context of being employed is moot, and it will be interesting to learn what they decide in this case.

What is irrelevant is the suggested EU angle, as is the question of when the person commenced employment, or self-employment abroad, because to be able to pay Class 2 you need to first meet the "immediately before" condition and only then can you consider whether, for a particular week, the person can pay Class 2 because they are working abroad, or whether they still have to pay at Class 3 because they were not working. It is perfectly possible to get a mix of Class 2 and Class 3 years and a year that comprises a mix of Class 2 and 3.

The "immediately before" test is a one-off test.  If the condition is met, the Class 2 door is forever "open", and one then considers the working abroad condition; fail that test and the "door" is forever "closed" unless said person returns to the UK and then leaves again, at which time the test has to be done again - the regulation requires the test to be done by reference to when the person "last left" the UK.

   

In my case I finished a PhD. in August 1986, went home and signed on and then left for a job in the USA in Jan 1987. I'd lived in the UK all my life prior to that, had 3 years of NI payments from being in college and also some part time work and was receiving the dole immediately before I left the UK and on that basis I was able to pay Class 2 NI.

1957DfurdPensionist

pinnks said:

What is irrelevant is the suggested EU angle, as is the question of when the person commenced employment, or self-employment abroad, because to be able to pay Class 2 you need to first meet the "immediately before" condition and only then can you consider whether, for a particular week, the person can pay Class 2 because they are working abroad, or whether they still have to pay at Class 3 because they were not working. It is perfectly possible to get a mix of Class 2 and Class 3 years and a year that comprises a mix of Class 2 and 3.

The "immediately before" test is a one-off test.  If the condition is met, the Class 2 door is forever "open", and one then considers the working abroad condition; fail that test and the "door" is forever "closed" unless said person returns to the UK and then leaves again, at which time the test has to be done again - the regulation requires the test to be done by reference to when the person "last left" the UK.  

This sounds unusually authoritative and helpful , and I even agree with the second paragraph because Ryanair/EasyJet et al make it very easy to return and leave again multiple times a year to EU at least!  I am not sure about the dismissal of my suggested "EU angle" on equal rights (ok I accept we are talking about an example or two of expatriates in the US but we and HMRC were subject to EU standards of equal rights for rather a long time and as you say, the law probably hasn't changed too much - yet!).

It is certainly rather draconian to further discriminate against an expatriate who is unemployed abroad cf. one who is working abroad.  It looks like strivers v. skivers guidance!

Another perhaps surprising truth is that some (or most?  Anyone know?) enlightened EU countries base their social pension entitlements on the number of years you have lived there and that's it - no jiggery-pokery with tax or NI contribution or contracted out records.

maullwurff

Thanks for all of your great comments.

It looks like mentioning the full story is very worthwhile.

Looking at the offline CF38 for guidance (I hope to use the online form if possible) - how would it be best to do this?
At 15 it says:
What was your employment status beforeyou left the UK?
a)employed b)self-employed c) neither employed nor self-employed

Should I select a) or b) or...
If I select c) I move to question 19 which is:
Were you receiving Jobseeker’s Allowance (JSA) immediately before you left the UK?Yes No - If yes, enter the date you last received JSA
As mentioned, jobseekers did not exist in 1986. As far as I remember I signed-on on leaving education/during my job hunt. Sorry if the answer is obvious!

Thanks for all of your help.
 

QrizB

maullwurff said:

As mentioned, jobseekers did not exist in 1986. As far as I remember I signed-on on leaving education/during my job hunt. Sorry if the answer is obvious!

At that tme it was called Unemployment Benefit. And that's what you "signed on" to receive.

pinnks

1957DfurdPensionist said:

pinnks said:

What is irrelevant is the suggested EU angle, as is the question of when the person commenced employment, or self-employment abroad, because to be able to pay Class 2 you need to first meet the "immediately before" condition and only then can you consider whether, for a particular week, the person can pay Class 2 because they are working abroad, or whether they still have to pay at Class 3 because they were not working. It is perfectly possible to get a mix of Class 2 and Class 3 years and a year that comprises a mix of Class 2 and 3.

The "immediately before" test is a one-off test.  If the condition is met, the Class 2 door is forever "open", and one then considers the working abroad condition; fail that test and the "door" is forever "closed" unless said person returns to the UK and then leaves again, at which time the test has to be done again - the regulation requires the test to be done by reference to when the person "last left" the UK.  

This sounds unusually authoritative and helpful , and I even agree with the second paragraph because Ryanair/EasyJet et al make it very easy to return and leave again multiple times a year to EU at least!  I am not sure about the dismissal of my suggested "EU angle" on equal rights (ok I accept we are talking about an example or two of expatriates in the US but we and HMRC were subject to EU standards of equal rights for rather a long time and as you say, the law probably hasn't changed too much - yet!).

It is certainly rather draconian to further discriminate against an expatriate who is unemployed abroad cf. one who is working abroad.  It looks like strivers v. skivers guidance!

Another perhaps surprising truth is that some (or most?  Anyone know?) enlightened EU countries base their social pension entitlements on the number of years you have lived there and that's it - no jiggery-pokery with tax or NI contribution or contracted out records.

I fear you are mistaken on a number of grounds.  For instance, where you live in terms of the qualifying for the UK pension is irrelevant and coming and going frequently would be your enemy, not your friend, as NI is based on "ordinary residence" not residence per se.  If you want to read the rules on Class 2/3 abroad, they are in Regulation 147 Social Security (Contributions) Regulations 2001 and are quite clear.

There is no discrimination against anyone but I doubt you'll let that thought drop.  Again, read the regulations.

Finally, I am not sure which "enlightened EU countries" you are referring to but those I have looked at all have contributory state pension systems, most of them leading to an earnings-related pension rather than the flat-rate model used by the UK.  Take your pick as to which one you think is better.  And most of said countries also continue to charge you for health and long-term social care after pension age, which we do not.