Voluntary NI contributions

[Democorruptcy]

I thought the thread was going to be about the important cut off date next April.

How long are you going to live to claim it? Do you feel lucky....? Well do you....?

Quote

 

Deadline approaching for state pension top-ups – less than six months left to fill ‘gaping holes’ in NI records

8 October 2022

A generous Government scheme which allows people to fill historic gaps in their National Insurance record will come to an end in less than six months, and those who could benefit are being urged to apply before the deadline.

Under normal rules it is only possible to fill gaps in your NI record up to six years after the year in question.  After that point, the year becomes a permanent gap in your NI record and could affect your ability to build up a full state pension.  This means that 2016/17 would normally be the oldest year which could be filled in 2022/23.

However, for a limited period – until 5th April 2023 – people are able to go much further back and fill gaps for any year from 2006/07 onwards – an extra ten years.  This concession applies only to those who come under the new state pension system, namely those who reached (or will reach) state pension age after 5th April 2016.

In some cases, buying back missing years can extremely valuable.  The current cost of voluntary Class 3 NI contributions is £15.85 per week or £824.20 per year.  This one-off lump sum payment can add up to 1/35 of the full rate to your eventual state pension.  As the state pension is currently £185.15 per week, this boost is worth £5.29 per week or around £275 per year.  Someone who gets this boost for at least four years will recover their initial outlay (net of basic rate tax) and everything beyond that would be profit.

In an extreme case, someone who missed the deadline would lose the chance to top up a further ten missing years of NI contributions (from 2006/07 to 2015/16 inclusive).  Although the outlay would be £8,242 (ten lots of £824.20), the annual state pension boost would be around £2,750.  Someone who was retired for twenty years would get back around £55,000 in total (before tax) for a one off payment of a little over £8,000.

However, anyone thinking of topping up their state pension for these earlier years must check with the Future Pension Centre at DWP before making such contributions.  This is because there are some situations in which paying historic contributions would *not* boost your state pension.  This could be particularly true for those who are short of a full state pension because of extensive periods of ‘contracting out’.

https://www.lcp.uk.com/media-centre/2022/10/deadline-approaching-for-state-pension-top-ups-less-than-six-months-left-to-fill-gaping-holes-in-ni-records/

 

 

[King Penda]

44 minutes ago, A_P said:

Did you get your bottle of spirits in the end?

I’ve got some daft bets on tonight (fuck ) No I put these daft bets on tonight 

[Bilbo]

It does some a bit unfair that class 2 ni is only  £3-15. If you need to top up and are not self employed it's £15.85 a week for Class 3!

My sister who bitches and complains she has to pay £3-15 as her husband is self employed and she is 'on the books'. But my wife who is missing a few years is going to have to pay £15.85.

God this country is well fk up.

[Frank Hovis]

1 hour ago, Wight Flight said:

I thought you were in favour of wealth taxes?

 

Erm, hardly!

I am in favour of property taxes being revised to a set percentage of their value rather than the current system of capped bandings.

[Wight Flight]

29 minutes ago, Frank Hovis said:

 

Erm, hardly!

I am in favour of property taxes being revised to a set percentage of their value rather than the current system of capped bandings.

Will that view change when you get your oceanfront mansion?

😊😊

[Frank Hovis]

49 minutes ago, Wight Flight said:

Will that view change when you get your oceanfront mansion?

😊😊

Probably!

[MightyTharg]

On 18/10/2022 at 20:28, Frank Hovis said:

 

Erm, hardly!

I am in favour of property taxes being revised to a set percentage of their value rather than the current system of capped bandings.

It seems a bit unfair if people who already suffer from high house prices then have their suffering redoubled by having to pay higher taxes.

At least in the current system people with cheap houses generally pay higher council tax which evens things up a bit.

Or would your set percentage vary by area, say 0.1% in the north and 0.01% in London?

[Frank Hovis]

2 hours ago, MightyTharg said:

It seems a bit unfair if people who already suffer from high house prices then have their suffering redoubled by having to pay higher taxes.

At least in the current system people with cheap houses generally pay higher council tax which evens things up a bit.

Or would your set percentage vary by area, say 0.1% in the north and 0.01% in London?

 

Set at half a percent of value everywhere which would bring in about the same amount as current council tax; payable by the owner rather than the resident.

This would serve to moderate the top end of house prices as people will be less willing to pay an inflated price for a house knowing that it comes with a high annual level of taxation.

[wherebee]

On 19/10/2022 at 06:28, Frank Hovis said:

 

Erm, hardly!

I am in favour of property taxes being revised to a set percentage of their value rather than the current system of capped bandings.

only if there is a legal obligation for the government to buy, instantly, the property for the valuation on which the charge is made.

Say my house is worth 2 million?  Fine, you give me 2 million and you get the house.  No inspection, no legal check, nothing.  

[Frank Hovis]

11 minutes ago, wherebee said:

only if there is a legal obligation for the government to buy, instantly, the property for the valuation on which the charge is made.

Say my house is worth 2 million?  Fine, you give me 2 million and you get the house.  No inspection, no legal check, nothing.  

 

Why would that need to be the case?

It's a straightforward property tax on a similar basis to the current one but without the cap.

People will be less likely to pay £2m for a house knowing that it comes with a £10k annual tax, rather than the current £2.5k - £4k level, so it will serve as a brake or reverse gear upon rampant HPI.

Plus if you can only afford to buy a pokey £60k studio flat then you are now paying £300 tax per year rather than the current level of about £1k.

This seems eminently fair to me.

[wherebee]

34 minutes ago, Frank Hovis said:

 

Why would that need to be the case?

It's a straightforward property tax on a similar basis to the current one but without the cap.

People will be less likely to pay £2m for a house knowing that it comes with a £10k annual tax, rather than the current £2.5k - £4k level, so it will serve as a brake or reverse gear upon rampant HPI.

Plus if you can only afford to buy a pokey £60k studio flat then you are now paying £300 tax per year rather than the current level of about £1k.

This seems eminently fair to me.

because under basic game theory, if the government gets more income the higher 'value' is assigned to a house, the more they will push a system to increase the 'value' accounted in their system.

Your house is on a street where a property sold for 20 billion?  Awesome, all your properties are worth 20 billion.  Tax please!

You see this in the US where in some states every time you improve a home (new kitchen, new deck) the rates go up as they say your house is now worth 500k not 450k.  Improvements actually hurt home owners under such systems.

Forcing the cunts to actually buy at the price they say it is worth is a very good check and balance.

[One percent]

1 hour ago, Frank Hovis said:

 

Why would that need to be the case?

It's a straightforward property tax on a similar basis to the current one but without the cap.

People will be less likely to pay £2m for a house knowing that it comes with a £10k annual tax, rather than the current £2.5k - £4k level, so it will serve as a brake or reverse gear upon rampant HPI.

Plus if you can only afford to buy a pokey £60k studio flat then you are now paying £300 tax per year rather than the current level of about £1k.

This seems eminently fair to me.

Unless it’s a fhl, then there won’t be any tax to pay at all.   

[Guest]

16 hours ago, Frank Hovis said:

 

Set at half a percent of value everywhere which would bring in about the same amount as current council tax; payable by the owner rather than the resident.

This would serve to moderate the top end of house prices as people will be less willing to pay an inflated price for a house knowing that it comes with a high annual level of taxation.

A land value tax would be better than a property price tax because the latter disincentivises owners from making improvements to the property.

[Wight Flight]

26 minutes ago, Darude said:

A land value tax would be better than a property price tax because the latter disincentivises owners from making improvements to the property.

Except that would encourage the building of homes with ever smaller gardens.

I would prefer ten houses with half an acre each than 10 houses crammed in to half an acre.

[Guest]

8 hours ago, Wight Flight said:

Except that would encourage the building of homes with ever smaller gardens.

I would prefer ten houses with half an acre each than 10 houses crammed in to half an acre.

It wouldn't necessarily have that outcome if you look at the bigger picture. LVT does incentivise land to be used for something, particularly in places where land is expensive (i.e. inside cities). If cities become denser then there will be less pressure for new housing in suburbia/small towns/rural areas so housing can be less dense there.

[BoSon]

On 18/10/2022 at 19:31, Democorruptcy said:

I thought the thread was going to be about the important cut off date next April.

How long are you going to live to claim it? Do you feel lucky....? Well do you....?

 

State pension retirement age of 66 and requiring 35 years of full contributions to get the max possible, seems easy to achieve for most normal workers.

Though I suppose it may be better to fill in the earlier years so can possibly retire early or in case forced out of work through poor health before getting to 66, but if 'on the sick' wouldn't the contributions still be paid by the state anyway?

Personally I'm paying voluntary class 2 NI as self-employed and will continue doing that even if not actually working (can make the voluntary class 2 payments via self assessment even if not earned enough to pay any tax that year) as it's currently the cheapest way of paying for a year's contribution as others have noted above.

[Democorruptcy]

3 hours ago, BoSon said:

State pension retirement age of 66 and requiring 35 years of full contributions to get the max possible, seems easy to achieve for most normal workers.

Though I suppose it may be better to fill in the earlier years so can possibly retire early or in case forced out of work through poor health before getting to 66, but if 'on the sick' wouldn't the contributions still be paid by the state anyway?

Personally I'm paying voluntary class 2 NI as self-employed and will continue doing that even if not actually working (can make the voluntary class 2 payments via self assessment even if not earned enough to pay any tax that year) as it's currently the cheapest way of paying for a year's contribution as others have noted above.

I haven't paid any since 2004 so paying £8k now for those 10 years from 2006 looks a no brainer on paper. At £2.7k extra per year I'd only have to draw a pension for 3 years to get my money back.

[Guest]

4 hours ago, BoSon said:

State pension retirement age of 66 and requiring 35 years of full contributions to get the max possible, seems easy to achieve for most normal workers.

I suspect there's a high chance it could go back to 40 years or more of NI stamps to get the full state pension in a future round of austerity. It wasn't long ago it was 44 years (for men who retired before April 2010).

I certainly don't trust it to stay at 35 years for people who are now under 40.

[Petatep]

I checked my contribution history recently. The 2 stand outs for me were that the online records go right back to the 70s (school holiday jobs) and just what a low threshold counts as a full contribution year. Some of my student summer jobs counted.

[Wight Flight]

7 hours ago, BoSon said:

State pension retirement age of 66 and requiring 35 years of full contributions to get the max possible, seems easy to achieve for most normal workers.

Though I suppose it may be better to fill in the earlier years so can possibly retire early or in case forced out of work through poor health before getting to 66, but if 'on the sick' wouldn't the contributions still be paid by the state anyway?

Personally I'm paying voluntary class 2 NI as self-employed and will continue doing that even if not actually working (can make the voluntary class 2 payments via self assessment even if not earned enough to pay any tax that year) as it's currently the cheapest way of paying for a year's contribution as others have noted above.

I opted out for about 8 years (which produced £22k that I cashed in last month) and will still hit 42 years contributions.

So glad I opted out for those years.

[BoSon]

18 hours ago, Darude said:

I suspect there's a high chance it could go back to 40 years or more of NI stamps to get the full state pension in a future round of austerity. It wasn't long ago it was 44 years (for men who retired before April 2010).

I certainly don't trust it to stay at 35 years for people who are now under 40.

Yes it's certain more changes will come along, so those furthest away from retirement will have an uncertain future. Fortunately those closer should be protected as it's too late to change course and pension investments only work over a long term so unfair to change the rules for any in their final approach to landing a state pension.

People say in years to come there won't be a state pension but there isn't an alternative, or if there was it would amount to much the same through state subsidy, and the UK has apparently a relatively poor state pension compared to other western countries based on a similar consumer capitalist mindset. Not sure how accurate that is.

The only real threat is means testing where they may extend it to immediate family so e.g. children have to support their parents in old age, which also encourages people to have bigger families as the young are forced to be able to support their elders as care homes and other outsourcing of old age care becomes too expensive for the average 'hard working family'. Again this would happen over decades giving people time to make plans accordingly.

[Guest]

1 minute ago, BoSon said:

the UK has apparently a relatively poor state pension compared to other western countries based on a similar consumer capitalist mindset. Not sure how accurate that is.

There's a common belief among UK pensioners on social media that the UK has the lowest state pension in Western Europe by a factor of 2 or 3, this is mostly nonsense though as it is not comparing like with like. In terms of government involvement in pensions the UK only has the state pension and that's it whereas some other European countries have compulsory funded occupational pension schemes which are organised by industry (e.g. all the factory workers pay into the factory worker scheme). So yes, the state is involved in these schemes but they are certainly not equivalent to the UK state pension which is just handing out taxpayer cash that was collected from PAYE last month. These European occupational schemes are much closer to company pension schemes.

The UK went a more laissez faire path with its pensions in which people who rocked up to work for a few decades get the pretty modest state pension and anything on top of that was left to individuals and employers to organise privately. Now that the pre-Boomers and Boomers are retired and paying much less tax many of them have decided they want a much bigger state which will give each retired person a few hundred quid of taxpayer cash a week.

Okay, but since UK pensioners also don't want to pay proper property taxes or have tax rates equalised between wage and investment income, where is the money for such a huge handout supposed to come from?

[Dave Bloke]

4 hours ago, Darude said:

There's a common belief among UK pensioners on social media that the UK has the lowest state pension in Western Europe by a factor of 2 or 3

The French state system the basic state pension is 678,71 €, reduced pro rata depending on how short you are of the 42 years contributions. So if you have contributed 21 years is is 678/2... and that is if you retire at 67! There are penalties applied if you retire earlier even if you have the contributions. If you have under 10 years contributions you get nothing (like the UK). This is the worst case but the calculations are quite involved; I assume to trip up the unwary who thing they'll get 678 worst case.

There are plenty of poor pensioners in France. Plus some boomers living it large.

 

[MightyTharg]

On 22/10/2022 at 18:26, Petatep said:

I checked my contribution history recently. The 2 stand outs for me were that the online records go right back to the 70s (school holiday jobs) and just what a low threshold counts as a full contribution year. Some of my student summer jobs counted.

How do you check it? I went to the government gateway thing and it only showed me income tax for a couple of years, not National Insurance.

 

[Petatep]

10 minutes ago, MightyTharg said:

How do you check it? I went to the government gateway thing and it only showed me income tax for a couple of years, not National Insurance.

 

https://www.gov.uk/check-national-insurance-record

You need to get a gov gateway ID (12 digit number) if you haven't got one.