Do you pay NI when self employed and retired?

mikeb222

Hi guys,
I've been getting my public sector pension for 11 years and am now approaching my state pension age of 66. I haven't had to pay NI since retirement, and I have to buy back contributions as I haven't been able to work since my early retirement, due to ill health. But, for the last 6 years I have been self employed selling books and other online stuff. My yearly earnings didn't surpass the £1,000 allowance, so I never bothered to tell HMRC. Friends now tell me if I had told them I would have earned NI credits for those years which seems very doubtful to me, but though I would ask here what the rules are.

Dazed_and_C0nfused

mikeb222 said:

Hi guys,
I've been getting my public sector pension for 11 years and am now approaching my state pension age of 66. I haven't had to pay NI since retirement, and I have to buy back contributions as I haven't been able to work since my early retirement, due to ill health. But, for the last 6 years I have been self employed selling books and other online stuff. My yearly earnings didn't surpass the £1,000 allowance, so I never bothered to tell HMRC. Friends now tell me if I had told them I would have earned NI credits for those years which seems very doubtful to me, but though I would ask here what the rules are.

Your friends are talking nonsense.

Nothing you have said suggests you would have earned any NI credits.

But if you had registered as self employed and completed a tax return each year you would have been eligible to pay voluntary Class 2 National Insurance.

Which at well under £200/year for each of those years would have been one of the best investments money can buy. 

It can differ once you only need one extra year but for some of them it would be adding £6.32/week to your State Pension entitlement. 

So even if basic rate tax was going to be payable on the extra State Pension you receive you would be in profit within 1 year of your State Pension starting.  Potentially with 30+ years of pure (triple lock protected) profit to come!

All the above assumes you have checked your State Pension forecast, fully understand what it shows and you need a few years extra NI to reach your personal maximum of £221.20/week.

Jeremy535897

You have until 5 April 2025 to fill in years that are missing right back to 2005. After 5 April you can only go back six years.
HMRC will not allow you to buy years at the class 2 rate as you are not registered as self employed. You will have to pay the class 3 rate.

mikeb222

So if I register as self employed now, could I go back the 6 years and pay the class 2 NI?

Dazed_and_C0nfused

mikeb222 said:

So if I register as self employed now, could I go back the 6 years and pay the class 2 NI?

As you haven't bothered to register as self employed or file tax returns for those years I don't think it's quite that simple.

You might get more insight by posting a question on the Topping up your State Pension board 

https://forums.moneysavingexpert.com/categories/state-pension-topping-up

Bookworm105

mikeb222 said:

So if I register as self employed now, could I go back the 6 years and pay the class 2 NI?

potentially, yes you might be able to, read this :
Query on Backdated Voluntary Class 2 NI Contributions - Community Forum - GOV.UK

Also please understand some HMRC admin respondents on their own forum can be "somewhat" lacking technical knowledge, so always make sure you check up at time of contacting HMRC, don't take answers on there at face value!

Jeremy535897

Bookworm105 said:

mikeb222 said:

So if I register as self employed now, could I go back the 6 years and pay the class 2 NI?

potentially, yes you might be able to, read this :
Query on Backdated Voluntary Class 2 NI Contributions - Community Forum - GOV.UK

Also please understand some HMRC admin respondents on their own forum can be "somewhat" lacking technical knowledge, so always make sure you check up at time of contacting HMRC, don't take answers on there at face value!

Your warning is apposite. My experience of this is that they will do almost anything to deny people the ability to pay back years at the Class 2 rate. But the short answer is to ask the people on the HMRC helpline on 0300 200 3500.