NI situation for Full-timers?

Why would anyone want to do this?

I think the rules have changed in that you now only need 30 yrs contributions instead of 44 to qualify for the state pension.To find how many qualifying years you currently have request a statement.

Thanks for the replies, fellas

Yes Investor, but anyone can register as self employed (choose any trade you like, or a window cleaner or a consultant etc), you don't have to show any profit or do any work lol. People that choose to pay voluntary NIC's pay around 5 times as much, I don't like rip off's like that.

I've always been self employed, but have been doing this full time for a couple of years now, but remain self employed as a carpenter even though I don't do any carpentry. I also started another business a few years ago growing christmas trees but have no income from that either, just sold a couple of trees to get going.

I don't know much about pensions tbh, but I would think the likelihood of a blanket pension in the future is slim, or maybe introduced at a vastly dumbed down blanket rate, say 25% of a qualifying pension rate.

I just looked up SIPP on money saving expert, and they say "Non-earners - You can contribute up to £3,600 per tax year and still get basic-rate tax relief. So, non-workers can pay in £2,880 per tax year, to which the taxman will add £720" but that might be out of date info'.

I'm in quite a lucky position to own land (hence the christmas trees) which I see as my pension fund in years to come :) What about you? You'll be a BF millionaire soon won't you, so won't need to concern yourself with a pension? ;)

Isn't paying NICs like throwing money into the street for other people to pick up?

Later on if you are in a position that you need the pension, you would get one whether you have paid in or not. Pension credits are means tested.
Wouldn't it be far better to use the money to buy something like silver coins and keep that money out of the system?

NI is also used for health services etc. right, not just pensions?

why not invest in a private pension scheme or just win enough to retire on?

The tricky thing is predicting whether there will be a pension for everyone regardless of contributions.

Taking 'only those who have contributed 30 years will get a pension' as a given, we can work out the following:

Investing £10 a month at a nominal compounding yield of 8% (contributions rising at 3% per year), gives you less than £20k after 30 years.

Assuming inflation of 3% per year, the pension in 30 years will go from £102.15 per week to £247.94 per week.

So the state pension pays out more than the entire value of what you would have built up in equity in a private pension in two years.

So with the following two assumptions:

1) Only those who contribute for 30 years+ get a pension
2) There will still be money around to pay pensions

It is massively preferable to get a state pension rather than a private one for someone contributing £10 a month.

Trevh : "I can't see the Tories bringing in a flat rate pension, Labour maybe would."

You might be surprised, it was IDS that brought the proposal forward as part of the big pension reform thing shortly after they got in, to help reduce complexity etc. I can't remember reading of them dumping the idea. In some ways, fair enough, but if they're going to do that they should remove the now infamous tax on private pensions that Brown imposed, to level it up for people who are making the effort to fund their own old age.

TheInvestor : I remember reading a while back that it was a bargain to make voluntary contributions, which you might want to do if you worked abroad for example, never mind not working or a "pro gambler" etc :) The state pension is run a bit like a pyramid scheme, as your back of the envelope figures suggest. But if the flat rate comes in, it's kind of pointless? (unless they change it back again!)

https://online.hmrc.gov.uk/shortforms/form/CWF1ST?dept-name=CWF1&sub-dept

Try that link Patrick.

I would go for something like a consultant (gambling consultant?), avoid building trades unless you also want to register for a CIS card (which you have to have to receive payments from contractors). A window cleaner could be a bit dodgy too on second thoughts, as it's a cash income and they might think you're fiddling if you show no income from that. A consultant who receives no work is simple enough. Keep it simple by using your name and address as the business name address. Keep a book showing all income and outgoings, which will be nothing! Keep bank statements showing business cheques paid in (none).

I do my tax return online once a year, it takes about half an hour. If you receive any interest payments on savings you'll be able to claim the tax deducted from that back. :)

Are you seriously suggesting people go to that effort and dishonesty in order to pay slightly less NI?

If you are gambling full-time, you have it very easy with taxes. I can't understand why people would want to make up non-existent jobs in order to dodge a little extra to the minimal contributions they make to the state.

What's worse is that you are dodging an entirely optional payment anyway. If you don't want to contribute, don't pay NI at all and give up your state pension entitlements. Instead, by gaming the system you are trying to get something for (next to) nothing.

Pure GREED.

A gameable system will be gamed.

Trevh • January 27, 2012 2:04 AM GMT
True investor, there's absolutely nothing dishonest about what I've suggested above, it's just common sense. Tax avoidance is legal and wise, tax evasion is not.



I am not understanding this Trev.  Are you suggesting that people create a fictitious self employed activity?

Have I got this right? To save a few coppers on NICs someone who is not working but wins a few pounds gambling, is going to declare themselves self employed to the HMRC?

What if they agree with you? Then decide that your income is the winnings from your gambling and want to tax it?

Has anyone else recently received notification from pension providers that opting out of serps is being stopped and people previously opted out of serps will be bought back in?

I opted out back in 1988 andf have paid in odds 'n sods since then, now it seems the government wants it's hands on my dosh :(

To those who think the difference between self-employed Class 2 contributions and voluntary Class 3 contributions is 'coppers' or not worth the effort:

How much do voluntary contributions cost?
If you want to pay voluntary National Insurance contributions for the 2011-12 tax year you'll have to pay:
£12.60 a week for Class 3 voluntary contributions
£2.50 a week for Class 2 contributions

http://www.hmrc.gov.uk/ni/volcontr/basics.htm#4

Any punter who reckons a monkey a year is not worth bothering about is no professional in my experience

I'm in much the same position as TrevH. I was a self-employed translator at the end of the eighties, but then started making punting on the nags pay well enough that I haven't actually done any work since 1990.

I had employed an accountant to sign off my return each year as atranslator, and in 1992 he received a letter from the Revenue asking what I was doing. he wrote back explaining the situation and stating that we would inform the Revenue if I began earning again. I haven't heard anything since then, but the DHSS continue taking the Class 2 contributions by direct debit, and it seems sensible to allow that to persist.

Partly because I can easily imagine a situation at retirement age where, outside of the money invested in my house, I have, say, 20 grand in savings and would not be eligible for supplementary benefits, so a state pension would be most welcome, rather than trying to make it pay with the game and my brain cells having changed beyond recognition.

And partly because I prefer to leave sleeping dogs lie. I pay a tenner a week, and in return I can look officialdom and the public in the eye and say I'm a self-employed translator, not a professional gambler. I like that.

It's not a lie. It's my job, it's the profession for which I've trained, and by being registered as self-employed I am unable to claim any kind of unemployment or sickness benefits, even if I wanted to. I'm in exactly the same financial position as any other self-employed translator.

And if it all goes terribly wrong at some point during this very extended sabbatical, it's the job which I'd have to attempt to resume.

Nah it's a lie. You were a translator, and you may be one again in the future but you are not one now.