PAYE and NI

[kellycell]

Hi all,

Can I just clarify that:

1) if I pay PAYE and NI to myself, as the employee of my company, this will count towards my state pension?

2) Also I have 9 years of PAYE and NI contributions so far, and I am planning to relocate for good to another country in a couple of months. Is it worth me paying PAYE and NI for 6 months? The only reason I would pay it, is so it can count towards my pension.

3) If I choose not to pay it at this point, will the HMRC give me the option to pay it at a later time, so it can count towards my state pension?

Many thanks!

[max]

Hi all,

Can I just clarify that:

1) if I pay PAYE and NI to myself, as the employee of my company, this will count towards my state pension?

Yes and no.

Yes...a portion(30% I think) of the NI will go to your pension...currently paying around £30/week I believe.(unless you're married, then you'll both get £45/week) Probably will be reduced. The rest goes to the NHS(risky business), and unemployment benefit, which you can claim if you have no work and no money.

No...you PAYE goes to other stuff. Things like keeping the un/under-employed in the manner they grown accustomed to. Consider PAYE like one of the toilets you find in NZ, commonly referred to as a "long drop" http://www.rangitoto.org/heritage/longdrop.htm

2) Also I have 9 years of PAYE and NI contributions so far, and I am planning to relocate for good to another country in a couple of months. Is it worth me paying PAYE and NI for 6 months? The only reason I would pay it, is so it can count towards my pension.

It's not really your choice. A chunk of your salary will be donated to the uk as PAYE/NI. You may be able to set the level of you salary, thus determining how much money you choose to donate.

I know what you were thinking, you thought you might see some of that hard earned money you paid in NI/PAYE back. Oooppps. <sound>Toilet Flushing</sound>

3) If I choose not to pay it at this point, will the HMRC give me the option to pay it at a later time, so it can count towards my state pension?

That would be just silly. You think they can manage your money better than you? If you see any pension from the UK.....I'll buy you a pint...which by that time will be £38.75, so it'll be worth it.


Oh...I might be completely wrong about this...so check with a professional.

[NotAllThere]

...1) if I pay PAYE and NI to myself, as the employee of my company, this will count towards my state pension?

Do that, and you'll get prosecuted. It's best to pay it to HMRC.

Which country are you relocating to? If it's within the EEA, then you'll start building contributions in their state pension. When you retire, you'll get the amount you're entitled to with 9 years contributes, from the UK, and whatever you've built up in your new country.

You don't have a choice to not pay NI. Any salary you get while in the UK will be subject to it anyway.

You should also be aware, that you can become immediately non-uk-tax-resident, if you intend to leave the UK permanently. This is a concession offered by HMRC.

[NotAllThere]

..
Yes...a portion(30% I think) of the NI will go to your pension...The rest goes to the NHS(risky business), and unemployment benefit, ...

To be absolutely clear all NI contributions go into general taxation. Pensions and benefits are paid out of current funds. None of it is ring-fenced for the NHS. There is no state pension fund, as there is with your employer/private pension.

NI is a total con. A tax on employment and nothing more. It should be abolished and integrated into income tax. This would save tax-payer money, as the system would be simplified. It would also totally eradicate the need for IR35. But it won't happen, because it would be viewed as a tax increase by the general populace.

[expat]

To be absolutely clear all NI contributions go into general taxation. Pensions and benefits are paid out of current funds. None of it is ring-fenced for the NHS. There is no state pension fund, as there is with your employer/private pension.

NI is a total con. A tax on employment and nothing more. It should be abolished and integrated into income tax. This would save tax-payer money, as the system would be simplified. It would also totally eradicate the need for IR35. But it won't happen, because it would be viewed as a tax increase by the general populace.

That is all true as a budget point (para 1) and IMHO as politics (para 2), but is QUITE WRONG as far as the OP is concerned. It IS in some cases possible to increase pension entitlement with a few relatively modest voluntary contributions.

If you pay 30 years of NICs then you qualify for a full state pension. If you have not paid 30 years, you will qualify for a proportion of the full pension.

You can make additional voluntary contributions to increase your number of qualifying years, subject to some restrictions. Each contribution represents 1 specific year when you might have paid NICs but didn't (e.g. you were abroad). At 300-odd pounds per year (amount depends on which year this is for) this is a stunning bargain: you will recoup every voluntary contribution in less than 3 years' retirement.

You need to contact DWP (www.dwp.gov.uk) to get a letter telling you how many years' you have and which years you can contribute voluntarily. There is a limit of 6 years back from the present, but that is temporarily extended: look into it without delay.

[QwertyBerty]

Hi all,

Can I just clarify that:

1) if I pay PAYE and NI to myself, as the employee of my company, this will count towards my state pension?

2) Also I have 9 years of PAYE and NI contributions so far, and I am planning to relocate for good to another country in a couple of months. Is it worth me paying PAYE and NI for 6 months? The only reason I would pay it, is so it can count towards my pension.

3) If I choose not to pay it at this point, will the HMRC give me the option to pay it at a later time, so it can count towards my state pension?

Many thanks!

My understanding is you only need to earn at least the LEL amount in a tax year to gain a qualifying year for your state pension. For 2008-9 this is £4680. So you don't even have to pay any income tax or NIC.

TBH I wouldn't worry too much about obtaining another qualifying year, I think you need 30 for a full pension and I'm not sure if 9 years will get you very much. Think about pension options in the country you're moving to.

QB.

[NotAllThere]

That is all true as a budget point (para 1) and IMHO as politics (para 2), but is QUITE WRONG as far as the OP is concerned. It IS in some cases possible to increase pension entitlement with a few relatively modest voluntary contributions.
...

You need to contact DWP (www.dwp.gov.uk) to get a letter telling you how many years' you have and which years you can contribute voluntarily. There is a limit of 6 years back from the present, but that is temporarily extended: look into it without delay.

Very interesting. But for the past six years, I've been building contributions in this country. So it seems odd I can also purchase contributions for the UK state pension.

[TheRefactornator]

You don't have a choice to not pay NI. Any salary you get while in the UK will be subject to it anyway.

There's no NI to pay on a salary up to £90 p/w in 08/09

[expat]

Very interesting. But for the past six years, I've been building contributions in this country. So it seems odd I can also purchase contributions for the UK state pension.

No, you can't. A person can only make voluntary contributions for years not already contributed. Sorry I wasn't clear.

[kellycell]

Thank you all for your replies.

I believe I have the option of paying PAYE and NI, since I have only taken dividends out, and not paid any salary to myself and therefore have not paid any PAYE and NI.

I had a 1 year gap during my work experience and HMRC sent me a letter saying that there is a gap in my NICs for that 1 tax year and that I have the option to pay around £360 to make that year count towards the full basic state pension.

So HMRC has given me the option to pay for that gap.

-- Will it give me the same option if I relocate to another country?
-- When I relocate, and reach retirement age, will I be able to get those 9 years as a pension?
-- Are the remaining years that I have to work 21, so I can get a pension? (Oh they sound soo many... - going into the national lottery website LOL - )

Thank you all!