Query re Voluntary Class 2 NI and State Pension

David_Watts2

Summary of current position as follows:

• ceased full time employment in early 2018
• had a few years as a non-tax payer and not completing self assessment (pension in drawdown but only taking amounts to use up remaining allowance)
• became aware of the need to do SA for 23/24 as taxable interest would be >£10k
• also took on a small part-time role in August 23 (moderator on an online forum) earning £1200 in the tax year
• agreement refers to me being a contractor and responsible for my own taxation. I submit monthly invoices to get paid
• I registered as being self employed
• Submitted my self assessment (no tax due) and paid voluntary class 2 NI contribution
• Waited for my NI record (and pension forecast) to update. NI record eventually updated to say the year is not full "This year is not included in your State Pension forecast because your record needs updating. Contact HMRC to update this tax year". No change to SP forecast (still need 6 more years to get the maximum)

Bearing in mind that the main advantage in taking the role was the ability to fill the 6 missing years of NI at self employed rates I'm assuming that HMRC are not yet entirely convinced that I qualify as SE. I've been considering whether to just phone them to resolve the issue or to get some one-off advice from an accountant first. I thought I'd seek some guidance on here first. My SA for 24/25 is ready to go but I'm just wondering about the wisdom of paying voluntary class 2 NI again if it's not going to count as a full year for SP purposes.

Any thoughts on what updates HMRC might be looking for and whether, based on the above, I should be entitled to pay voluntary class 2 NI and have it count towards my SP?

DRS1

I may be barking up the wrong tree but is it possible that your voluntary contributions for 23/4 did not cover the whole year - but only August 23 to April 24?  Wouldn't you also need to fill April 23 to August 23?

David_Watts2

DRS1 said:

I may be barking up the wrong tree but is it possible that your voluntary contributions for 23/4 did not cover the whole year - but only August 23 to April 24?  Wouldn't you also need to fill April 23 to August 23?

Ah, hadn't considered that, you might be right. The amount I paid does appear to correspond with a part year from August onwards, looking at what the rate was for 23/24.

So if I pay it again for 24/25 I would at least be paying a full year.

So am I able to top up 23/24 to a full year at SE rates?

For clarification, I reach SP age in 2032 so I've still got enough future years to potentially fill before I need to considering buying any past years at class 3 rates

The amount paid equates to exactly 36 weeks at £3.45 per week which fits the timescale, so there's certainly the issue of not having paid a full year if nothing else. Though I'd have probably expected that to just show as a part paid year rather than the "record needs updating" message!

QrizB

David_Watts2 said:

So am I able to top up 23/24 to a full year at SE rates?

I'd expect you to need Class 3 payments for the weeks prior to you becoming self-employed.

David_Watts2

Thanks for the replies. At least now I know that 23/24 was never going to appear as a fully paid up year. I've submitted the 24/25 return to get it out of the way. I've paid the voluntary class 2 again and it's the full annual amount. I'll deal with any remaining queries in the new year but at least the tax return is dealt with

DRS1

There are a couple of threads about records need updating which you may like to see.  The first is about 22/3 and so may not be relevant to you but the linked article explains the issue HMRC had and who knows if it carried over into the next year.
HMRC National Insurance Record - Year not Full — MoneySavingExpert Forum
NIS: "Year is not full" 2024/25 after paying voluntary contributions? — MoneySavingExpert Forum