Class 4 NIC

Class 4 NIC

Didn't find your answer?

If you have never paid class 2 (although should have done), but have paid class 4 - how does this affect your state pension, if at all?

Is paying class 4 sufficient to get full state pension?
Rob

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By johnnairne
12th Dec 2005 11:59

Unpaid Class 2 National Insurance Contributions
I have a partnership client with two partners. It was always assumed that the second sleeping partner was responsible for paying his own Class 2 contributions. The partnership bank account paid for all the partners Income Tax & Class 4 NI contributions. I became aware that the second partner had never paid Class 2 - all this over a 10 year period ! I spoke to Longbenton and was advised that the sleeping partner had to enrol as newly self-employed.
There was no attempt at deception here, just ignorance. I have yet to see the outcome of the 10 year arrears !
There is clearly no tie up between the NI records and Income Tax. I wonder how many more people would be revealed from a data matching exercise !

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By LJCWBW
11th Dec 2005 12:45

Mary is right
Further to the comments - yes Mary is right. I also advise all my new clients to contact the NIC office in Newcastle at least once every 2-3 years and ask for a projection; just to make sure that their contributions are recorded correctly and are up to date.

I know we're not going to get a state pension when we reach 65yrs (!)but it is best to hedge your bets and ensure that the NIC dept at least has your records correct.

I personally write every year on hubby's behalf as he has spent some of his working life abroad. He came back from working in the Channel Islands (the UK has a reciprocal arrangement) a few years ago and I got a projection through which said that he had not paid for those years.I rang them to complain that he had paid whilst in the CI and sent them proof.

However, every year his projection shows a shortfall for those years so every year I write and tell them that they are wrong.

I got through to a manager last time and was told that my hubby's projection will always show a shortfall as the UK NIC computer cannot cope with reciprocal arrangments. I was told to keep all records proving that he has paid until he is 64 1/2 years (he's 42 yrs now!), wait until he receives the letter advising him that he will not be getting the full state pension and then send in proof as it is only then that they can record his contributions from another country onto their records.

Proof that they are in a mess and as such everyone (incl those of us who have been PAYE) should write and make 100% sure that their contribution records are correct.

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By User deleted
06th Dec 2005 13:01

Class 2 national insurance is due and payable for all the previous years, for a man aged under 65 who was self employed and earned over the exemption limit each year.

Liabilities may be enforced only for up to six years, although demands may netherless be issued for longer periods.

Mary W

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By keithdeane
05th Dec 2005 19:35

Paying NIC for six back years at 65 years old
I know nothing about NIC, but assume Mary W is correct that you can only pay for six years back. However as the father in Martin Foley's comment is presumably approaching 65, how does this interact with the automatic credits that I thought were given for years past age 60? Does it mean paying 6 years back Class 2 NIC, of which 5 years would in any case be covered by automatic credits?

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By martinfoley07
01st Dec 2005 15:52

timely question and unhappy answer
A timely question, I was about to post identical one myself. The father of a client is coming up to retirement age, notified of horrible shortfall from state pension (despite apparently paying some past years "shortfalls" when receiving notices), so the client asked me to go round and speak with his father.

It transpires that he was self-employed, has merrily been filing annual SARs and paying IT and Class 4, but had never heard of Class 2!!!

We phoned NI office, they said they did not have him registered as self-employed.

So much for the NI being part of HMIT (aka HMRC)- what a shambles.

Mary's answer is horrifying, but looks as if it is correct.

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By User deleted
01st Dec 2005 09:46

Class 4 national insurance is really just an extra tax, no benefits at all.
Class 2 is the one that counts towards your pension and other benefits.
I would suggest that you arrange to pay the back class two contributions for the maximum 6 years, if required.

Mary w

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By gavinp
01st Dec 2005 09:51

Request a forecast on line
Why not try for a forecast?

This should tell you if there are or will be any shortfalls in the state pension.

Click the link below to get to the inquiry area:

http://www.direct.gov.uk/

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