Could Anyone Please Help Regards My Husband And National Insurance Stamp.?

[lilacben]

He is now 64 and going to be 65 in september. He has enough stamps for his full pension. He has been self employed about two years. But in the last year he hasnt really earned a lot. He has a little job for 6hours a week but is still paying his stamp himself. He does pay tax on this but gets it back usually at end of tax year. Does he need to keep paying it.? Also he is still down for self employed but he isnt doing any work except the 6 hours a week. but as I said he is paying tax on that. Thankyou

[New Judge]

How is he paying tax on 6 hours work a week? I make this almost £30 per hour (equivalent to £1200 for a 40 hour week). Is his tax code BR (Basic Rate) meaning he loses 20% of anything he earns? If so he should get the tax office to issue a proper tax code to his employer. Also bear in mind that if he has any interest from savings, tax at 20% will be deducted and he may be eligible to claim some of this back at the end of the year. (If your earnings are below £8105 pa ther is 0% saving rate if your for the first £2560 of savings income).

Now for the NI. If he has 30 qualifying years that is all he needs for a full State pension. He is now too late to check his pension forecast with the DSS (they will not do it if you are within 12 months of pension age). But if he has enough NI contributions for a full pension he most certainly should not pay any more NI voluntarily. By the way, he can apply for his State Pension four months before his 65th birthday. If he does this by phone he will be told there and then how much he will receive in September.

[factor-fiction]

Hi NewJudge - I read it that he is self-employed so he has no employer. I think he means that he offsets his own NI payments against his income in some way. As you say , the income may be below the tax threshold, unless he charges maybe £200 an hour. Or maybe it's run as a profit making business

[lilacben]

Thankyou that is very helpful. I will pass what you have said onto my husband. The reason he went self employed was because he helped our son in law out with his tyre business. but stopped doing that two years ago. After that he was just doing a few hours with a charity whenever they needed him. Since last June he has this little 6 hours a week job. He has been getting a small works pension as well. The tax he paid last year was refunded in april. so I expect he will get it back this year as well. he only earns £6 something an hour. Brendax

[lilacben]

Thankyou again, my husbands tax code is 0000T 1. if that is of any help.? they are stopping him £7,40 on £37. Should he go and speak to someone at the tax office about this do you think.? many thanks Brenda and Happy New Year.!!

[lilacben]

Sorry me again just to let you know a little more his private pension is only about £306 per month. he doesnt get taxed on that. just the 6 hours.and no savings.

[New Judge]

The current personal allowance upon which no income tax is payable is £8,105pa. (This is rising to £9,440 for the year 2013-14). This means at present your husband should pay no tax and should not have any deductions made from either his pension or his wages.

At present he is paying 20% on all his wages (£7.40 is 20% of £37) because his employer has not been given a tax code by the taxman. He needs to contact the tax office and ask them to “split” his tax code. He should tell them his pension income (£3,672pa) and ask them to provide a tax code to his pension provider to cover this (this will be 368). The balance of his tax code (810 minus 368, which equals 442) should be provided to his employer. This means he can earn up to £4,420pa (£85 per week) before any tax is due. He should do this because he should not lend cash to the taxman interest free every year.

Next September matters will change a little. If he receives the full State Pension (£107 pw) this will add about £2,800 to his income (he will receive the State pension for about six months in the year 2013-14). Although the State pension is not taxed it forms part of your taxable income. So if his private pension and earnings remain the same he will have a total income of some £8,550 in the year. This means he will only be able to earn another £880 or so (or about £17pw) without paying tax. The following year his private and State pension will use up almost all of his personal allowance (£9,236 at the current rates, in fact) so he will be liable to pay tax on almost all of his wages. He should keep in touch with the tax office during this time to avoid making any interest free loans to the taxman!

[lilacben]

New judge...you have been really helpful we are so grateful to you. All the information you have given us. My husband is going to get on to the tax man first thing tomorrow morning.I don't know how to thankyou enough. Brenda. Xx

[owdhamer]

I would say yes.

[lilacben]

Hi
New judge, I thought I would give u an update. My husband spent ages on the phone to the tax people. And he asked about a split tax code like you said. Only for him to find out he doesn't have a paye number. So is waiting for that now from his works head office. Brenda xx

[New Judge]

Glad to be of help. Hope you get it sorted OK.

[lilacben]

Hi new judge, Just an update... husband has now given the information needed to the tax office and asked for a split tax code. So will now have to see what happens. Brenda xx

[1eyedjack]

I find this thread a little hard to follow. The heading appears to question whether payment of NIC is necessary (and desirable if optional) under the circumstances, but most of the subsequent correspondence is a discussion of potential income tax liabilities, deduction of income tax under PAYE, comarison with Income tax personal allowances and recovery of overpaid income tax, but not addressing the NIC question originally raised.
As I read the OP, the husband appears to be paying NIC as a self employed person, which I expect is through the class 2 route rather than purely voluntary class 3 contributions.
Class 2 contributions are normally compulsory if you are of working age, based in UK and engaged in self employment. There is no exemption available simply because you have paid up sufficient years for a full pension.
However where, as in this case, self employment profits are sufficiently low, you can claim (on form CF10) exception from payment of class 2 NIC if you wish. To that extent, if the circumstances fit, class 2 is effectively "voluntary", although once paid I don't think it can be reclaimed if the original payment was valid. Claim form here
http://www.hmrc.gov.uk/forms/cf10.pdf
The earnings limit for exception (net profit after expenses) is £5595 in 2012-13, rising to £5725 in 2013-14, as per here:
http://www.hmrc.gov.uk/rates/nic.htm
Hope that helps