Risks of Topping up UK NI while living abroad and new HMRC deadline today

NotGertrude

First, a new decision just made by HMRC and told to me by them on the phone today: Anyone living abroad must have made sure HMRC gets their CF83 form by 5th MARCH (to top up their UK NI before the previously announced April 5th deadline allowing top ups as far back as 2006).

So, here's my query... I have 17 years of NI contributions on my NI pension statement / forecast up to 2016. My SIPP manager has advised me to top up missing years and said 35 years would be best. On my NI Forecast I am projected to get about 110 pounds per week (about half the full uk state pension). On my NI statement , from 2016 on it says they are still calculating if those years qualify or not - so those years are not (yet?) counted as qualifying years for the UK state pension.  I have been paying into German Rentenversicherung since 2016 (and must continue to do so while living and working there).  If the German years count as qualifying years in the UK, then I need do nothing as the years I will contribute in both countries will eventually be more than 35.  If those years do not count , then I believe I am eligible to pay class 2 NI voluntary payments as self employed (abroad) from 2016 onwards.  After 4 hours of trawling here and on Gov UK, and phonecalls with HMRC and the International pension service , I still can't confirm if the years in Germany will ever be recognised in the UK - so far since 2016, not). Things I have been told today are: 

"We aren't sure if your German payments count towards your qualifying years, but you will get both a UK pension for the years we do recognise and a separate German pension based on the years you pay in there. We can however put you through to HMRC..." (Int, Pension Service).
"We can't answer that question. Write to PT Operations and they will tell you, but it is currently taking them 59 weeks to reply" (HMRC).
Elsewhere, especially on this site, it is inferred that one can continue to make voluntary payments from abroad and that it is usually a good idea, however on one site I read that step would leave me without health insurance: 

"Can I just make voluntary contributions so my State Pension is fully accounted for?

Yes, you can make voluntary NICs in many situations. You need leaflet NI38 for the eligibility criteria, which includes HMRC form CF83 

It is important to remember that this leaves you without health insurance in the country that you are working in if you make voluntary UK NICs."

(taxrebateservices.co.uk/tax-faqs)

This is alarming as I very much need the German health insurance and I absolutely do not want the headache of dealing with more German bureaucracy / getting kicked out of the health system here. I am tempted to believe that that statement above is incorrect as I have never seen such a point repeated anywhere else. There is no warning about such a consequence on all the Gov uk / NI / HMRC pages on this issue.  Can anyone advise on that , and on the question of if I need to make voluntary payments in the UK or if my German payments count towards the 35 year goal? Many thanks in advance for any clarity! 

molerat

German years will not add to your UK pension but can be aggregated when there are minimum years required which does not apply to you as you are already beyond any need for that.  

35 years is of no relevance to you but you may coincidentally require 35 years to get a full pension.  

Unfortunately you will not be able to pay the class 2 for overseas without going through the CF83 system, the soon to be closing door has been open since 2013 so it is no surprise they want to shut it firmly in the near future but nowhere is 5th March shown. You will still be able to buy 19-20 onwards so there is no big loss to those earlier years being no longer available.

I have never heard of not being able to claim German health insurance if paying for an overseas pension.

How much exactly is your current accrued amount, £££.pp ?

When do you reach state retirement ?

pinnks

Paying UK NI will have no impact on your German health insurance position but when you receive your UK pension, I believe it, along with all of your other income forms the basis of assessment for your healthcare costs.

As you will get a German pension as well as your UK pension you should ask DRV to do a Kontenklärung to include 2 things:

1. you can have your UK periods of post-17 education and training recognised in your German contribution record.  This will give you German "Wartezeit" and may give you earnings points "Entgeltpunkte" akin to NI credits in the UK.
2. making a record of your UK NI record to date as that will be needed anyway when you come to claim, so that Germany can apply the EU rules on aggregation/pro-rata pensions

They will send you a Rentenauskunft when that is done, which will include the 2 calculations required under the EU rules.  These are the domestic-only calculation or innerstaatliche Berechnung, and the EU aggregation calculation or zwischenstaatliche Berehnung.  From those you should get a good understanding of how it all hangs together.

Remember also, that you can claim a tax deduction in Germany for the cost of any voluntary UK NI paid - your Steuerberater should tell you about that anyway, lol.

When the time comes, your UK pension will be taxable only in the UK (assuming you are still in Germany) but will feed into the tax rate, via Anlage AUS, that applies to your income that is taxable in Germany.  Make sure you get that right as many people get confused with the income being reported as income and taxed and being reported on Anlage AUS to feed into Progressionsvorbehalt.  Again, one to discuss with your adviser.

NotGertrude

Dear Molerat, Dear Pinnks,
Many thanks for your swift and very helpful detailed responses! First I want to confirm that the 5th March deadline was told to me by am HMRC rep on the phone yesterday and they said it was a brand new decision. I'm not surprised it's not online anywhere yet - I guess anyone can call them if they need to confirm it. 

In particular I am grateful to both of you for your reassurances about the risk of losing health care - it seemed to me also that it was a mistake (or perhaps not phrased exactly enough). 

@Pinnks: I am particularly grateful for the reminder about the tax deduction (I'd forgotten that!) and in general your explanation has made me feel far more confident about approaching the DRV (who are very helpful I know, but I feel I will understand them better now!)

@Molerat: my UK NI state retirement age is summer 2038. Logging in online I am not given a figure for my current accrued amount. I am able to access the pension summary (Inc forecast) and the NI record which simply shows full and not full years. There are 17 full years up to and including 15/16. From then on it simply says "not full/ we are checking if this year counts towards your (UK) pension" - which, as you have explained , it won't because I have been contributing to the german state pension since 2016. The forecast estimate is that I would get 107.44 PW or 'if you contribute til April 38' 195.92 PW.  I would prefer to make voluntary contributions now , if it is worth it. I was told it is very much worth it to contribute until I have 35 years of NI qualifying yes in the UK - to qualify for the full state pension - and I thought it a bargain as I seem to meet the requirements for class 2's (which I understand would cost me about 170 pounds per year). However , it seems you may be suggesting it isn't worth it/I cannot get the full state pension?? (I'm afraid I don't quite understand what you meant by "35 years is of no relevance to you but you may coincidentally require 35 years to get a full pension.  "  I hope you are able to elucidate further! 

Many thanks to both of you for your help! 

eastcorkram

@NotGertrude

Some people need more than 35 years. A lot more. 

Some need less. I reached the maximum with 31 years. 

molerat

Your current accrued amount is the £107.44 "Up to April 2024" figure. The figures you have quoted show you will in fact need 35 years so need another 18 on top of your current 17 with 13 available going forward so need 5 back years including 24-25 which would be at leat 20-21 onwards. That means you are not limited to the April cut off and have until April 2027 to start things rolling, of course getting in earlier will leave you some slack at the far end.

Many people blindly use the often misquoted and misunderstood "35 years for a full pension" when that only actually applies to anyone born this century.  Everyone with a pre 2016 NI history is on a hybrid scheme which can, according to data gathered on here, take anything between 28 and 48 years to get to the max depending solely on personal circumstances - I personally have 42 years and could not get to the max before I reached SRA.

However , it seems you may be suggesting it isn't worth it/I cannot get the full state pension??

No inference of that at all, it most certainly is worth it and you can get to the full amount but there is no absolute urgency in paying.

squirrelpie

NotGertrude said:

First, a new decision just made by HMRC and told to me by them on the phone today: Anyone living abroad must have made sure HMRC gets their CF83 form by 5th MARCH (to top up their UK NI before the previously announced April 5th deadline allowing top ups as far back as 2006).

It seems very strange that they would make a decision like that so close to the deadline. It will create a mass of objections from people caught out by the late change, and I still can't see any sign of this decision online. So I suspect it might be a misunderstanding on the phone, perhaps of communication or of understanding by the HMRC employee.

NotGertrude said:

"Can I just make voluntary contributions so my State Pension is fully accounted for?

Yes, you can make voluntary NICs in many situations. You need leaflet NI38 for the eligibility criteria, which includes HMRC form CF83 

It is important to remember that this leaves you without health insurance in the country that you are working in if you make voluntary UK NICs."

(taxrebateservices.co.uk/tax-faqs)

I can't find this quote on that web page. Could you provide a more detailed description of how to find this online advice, since it clearly needs correction.

Dazed_and_C0nfused

squirrelpie said:

NotGertrude said:

First, a new decision just made by HMRC and told to me by them on the phone today: Anyone living abroad must have made sure HMRC gets their CF83 form by 5th MARCH (to top up their UK NI before the previously announced April 5th deadline allowing top ups as far back as 2006).

It seems very strange that they would make a decision like that so close to the deadline. It will create a mass of objections from people caught out by the late change, and I still can't see any sign of this decision online. So I suspect it might be a misunderstanding on the phone, perhaps of communication or of understanding by the HMRC employee.

NotGertrude said:

"Can I just make voluntary contributions so my State Pension is fully accounted for?

Yes, you can make voluntary NICs in many situations. You need leaflet NI38 for the eligibility criteria, which includes HMRC form CF83 

It is important to remember that this leaves you without health insurance in the country that you are working in if you make voluntary UK NICs."

(taxrebateservices.co.uk/tax-faqs)

I can't find this quote on that web page. Could you provide a more detailed description of how to find this online advice, since it clearly needs correction.

Why anyone would rely on a company like that for information is beyond me.

NotGertrude

squirrelpie said:

NotGertrude said:

First, a new decision just made by HMRC and told to me by them on the phone today: Anyone living abroad must have made sure HMRC gets their CF83 form by 5th MARCH (to top up their UK NI before the previously announced April 5th deadline allowing top ups as far back as 2006).

It seems very strange that they would make a decision like that so close to the deadline. It will create a mass of objections from people caught out by the late change, and I still can't see any sign of this decision online. So I suspect it might be a misunderstanding on the phone, perhaps of communication or of understanding by the HMRC employee.

NotGertrude said:

"Can I just make voluntary contributions so my State Pension is fully accounted for?

Yes, you can make voluntary NICs in many situations. You need leaflet NI38 for the eligibility criteria, which includes HMRC form CF83 

It is important to remember that this leaves you without health insurance in the country that you are working in if you make voluntary UK NICs."

(taxrebateservices.co.uk/tax-faqs)

I can't find this quote on that web page. Could you provide a more detailed description of how to find this online advice, since it clearly needs correction.

Thank you for your post. I personally don't believe there was a misunderstanding, the lady on the phone asked me to wait while she checked her info with a colleague , was very clear and repeated it as I couldn't believe my ears the first time. Unfortunately I can't say which exact department I was talking with as I had been put through to them by the international pension service. 

With regards to the incorrect info on the other website, I wasn't permitted to include links here as I'm a newbie so I included the full quote and website. However, the point has been made (here) that this info is incorrect or at least imprecisely phrased - as I thought- and possibly the source is unreliable. I was only looking at it because I was looking all over for clarity on other points, which I finally found here. 

NotGertrude

molerat said:

Your current accrued amount is the £107.44 "Up to April 2024" figure. The figures you have quoted show you will in fact need 35 years so need another 18 on top of your current 17 with 13 available going forward so need 5 back years including 24-25 which would be at leat 20-21 onwards. That means you are not limited to the April cut off and have until April 2027 to start things rolling, of course getting in earlier will leave you some slack at the far end.

Many people blindly use the often misquoted and misunderstood "35 years for a full pension" when that only actually applies to anyone born this century.  Everyone with a pre 2016 NI history is on a hybrid scheme which can, according to data gathered on here, take anything between 28 and 48 years to get to the max depending solely on personal circumstances - I personally have 42 years and could not get to the max before I reached SRA.

However , it seems you may be suggesting it isn't worth it/I cannot get the full state pension??

No inference of that at all, it most certainly is worth it and you can get to the full amount but there is no absolute urgency in paying.

You've been really helpful, thank you very much indeed. It's all clear now , amazing. 

squirrelpie

NotGertrude said:

squirrelpie said:

NotGertrude said:

First, a new decision just made by HMRC and told to me by them on the phone today: Anyone living abroad must have made sure HMRC gets their CF83 form by 5th MARCH (to top up their UK NI before the previously announced April 5th deadline allowing top ups as far back as 2006).

It seems very strange that they would make a decision like that so close to the deadline. It will create a mass of objections from people caught out by the late change, and I still can't see any sign of this decision online. So I suspect it might be a misunderstanding on the phone, perhaps of communication or of understanding by the HMRC employee.

NotGertrude said:

"Can I just make voluntary contributions so my State Pension is fully accounted for?

Yes, you can make voluntary NICs in many situations. You need leaflet NI38 for the eligibility criteria, which includes HMRC form CF83 

It is important to remember that this leaves you without health insurance in the country that you are working in if you make voluntary UK NICs."

(taxrebateservices.co.uk/tax-faqs)

I can't find this quote on that web page. Could you provide a more detailed description of how to find this online advice, since it clearly needs correction.

Thank you for your post. I personally don't believe there was a misunderstanding, the lady on the phone asked me to wait while she checked her info with a colleague , was very clear and repeated it as I couldn't believe my ears the first time. Unfortunately I can't say which exact department I was talking with as I had been put through to them by the international pension service. 

With regards to the incorrect info on the other website, I wasn't permitted to include links here as I'm a newbie so I included the full quote and website. However, the point has been made (here) that this info is incorrect or at least imprecisely phrased - as I thought- and possibly the source is unreliable. I was only looking at it because I was looking all over for clarity on other points, which I finally found here. 

Sorry, I wasn't implying any criticism of you at all. My first comment is about the potential incompetence at HMRC. My second comment was simply a request for further information as stated, because the text you quoted does not seem to appear on the page you stated ( https://www.taxrebateservices.co.uk/tax-faqs/ ). So I presumably need to click on something on the page to see for example 'NI38' or 'HMRC form CF83'.