Should I take the small earnings exception or pay class 2 contributions?

pamaris

I didn't know whether to put this on the tax board or the pensions board... but anyway here goes.

Currently I am getting Home Responsibilities Protection (due to child benefit). I am also receiving Carer's allowance for the time being, which apparently gives me a NIC credit for each week it is paid. I am pretty sure that the Carer's allowance will discontinue within about 6 months though.

I recently was accepted to work for AQA, which essentially means I will be self employed from home. I will probably make about £300-400 per month.

Considering my situation, should I take the small earnings exception or pay the voluntary contributions? Will HRP fill in the gap if I do not pay? Currently I am 31 and I have maybe 8 months of credits from the Carer's allowance. I also have about 8 years of contributions in another country which will eventually be transferred. I will be getting HRP for another 15 years.

I don't mind paying the class 2 contributions but don't want to do it if it's not necessary. I would like to work my way up to a full entitlement by retirement age (I think it is 68 for me).

Thanks

margaretclare

What's the 'small earnings exception'?

Margaret

pamaris

margaretclare wrote: »

What's the 'small earnings exception'?

Margaret

If you are self employed you are required to pay Class 2 NI contributions. If you are self employed and make £4635 or less in one year, you can be exempted from paying the NI contributions. I am just trying to find out if it would benefit me to pay the contributions, as they are only £2.20 a week.

sebastianj

With small earnings, you don't pay NI, not sure if it is paid for you though. With small earnings you will be entitled to WTC as well (I think).
rgd seb

pamaris

sebastianj wrote: »

With small earnings, you don't pay NI, not sure if it is paid for you though. With small earnings you will be entitled to WTC as well (I think).
rgd seb

Nah, my OH's earnings are thankfully not so small, so no WTC!

bumpybecky

I'm currently getting paid maternity allowance as I paid the class 2s voluntarily despite being eligable for the small earnings exemption. MA is worth approx £4k - fairly good return on £2.20 per week....

There are other benefits payable of you've paid the class 2 NI contributions, not sure which though. Is it possible you might need these?

callow

I am self employed and I now pay the NI contribution.

Initially I had the exemption certificate as the money I earned was "pin money" as my husband was the main wage earner, earning a very good wage and I had home responsibilities protection.

I am now a single mother, the NI contribution will pay out Incapacity Benefit if I am sick and my working tax credit is also protected during that time.

If you consider that your wage is an important part of the family income it is best to protect it with the NI contribution.

You do have to pay for a certain length of time before you can claim the Incapacity Benefit.

Sally