NI Contributions

Quite right.

But you must, of course, be carrying on a proper trade etc in order to pay Class 2. As you might expect, HMRC have a programme which investigates potential cases of abuse which is as well-resourced as you would expect for an area which is not a political priority, is not targeted and offers no direct yield.

You are confusing the NI system with something which is logical and fair.

Another way is if you have no income you can get someone (eg husband) to employ you (eg to do housework etc) and pay you about 95 a week. Then you get class 1 NI completely free, which not only gets you credits for the basic state pension, but also for the second state pension at the same rate as someone earning around 12500 a year. The income will be taxable but below the tax threshold if its your only income.

Except that having lost the Arctic Systems case the government are now introducing new legislation that will mean paying one's spouse to do anything will be very difficult/questionable.

husband)

AIUI the new legislation will be concerned with contrived "income splitting" to reduce income tax, eg where one partner is paid half the profits despite not doing work of that market value, which is completely different from the above. The above is not a tax dodge at all, it is simply formalising what happens with a stereotypical "traditional" couple.

If I want to employ my wife to cook my dinner, wash my clothes, and iron my shirts, providing she does actually do those things and I pay her a market rate, there is no fiddle as there is above case. And as well as the state pension/S2P credits, she'd potentially get SMP, SSP, JSA(C) and bereavment benefits.

BTW forgot to mention - do you realise that the rules have just changed such that you only need 30 years for a full state pension, assuming you will reach state pension age after April 2010?

Christine Morrison wrote in news: snipped-for-privacy@4ax.com:

Sounds like you're right. This sort of thing forms the discussion in many NI offices: a lot of these rules are just plain silly: they only catch out those who are both sincere and ignorant.

Check this advice, because it may be out of date,

If you're self employed, take the whole lot in profit. You will then be liable for 8% Class 4, with no benefits. Beats mucking around with Class

2, which costs more, and carries far fewer benefits than a private scheme (for which the contributions are tax free, unlike NI).

Don't pay yourself any earnings, the word "earnings" carries far more liabilities than profit, which is the money you didn't "earn."

Welcome to Great Britain.

Those "credits" are worth the minimum. You need to make those "credits" up to 48 x the minimum in each benefits year, benefits years run Jan to Dec.

When you do, you may find you have wasted your money. Make sure you know what your getting.

The Class 2 have some benefit, but make sure you cannot get a better deal elsewhere.

True. Think of Class 4 as Income Tax. They have no benefit.

No, the rules are nuts, and privately, in many cases not so privately, staff working in those offices will tell you they are nuts.

"Andy Pandy" wrote in news: snipped-for-privacy@mid.individual.net:

Your wife must be so pleased that she can claim SMP and SSP from you, and refer the matter to a Social Security Appeal Tribunal at your expense, if you don't pay.

The government wants to stop spouses getting JSA(C). If you look at the payment regs for JSA, you'll notice they're much the same for both CB and IB payments.

Sinister bastards, governments.

Well, yes, but the govt pay me the full amounts (or almost the full amounts) IIRC.

expense, if

Do they? Not heard that one...

Except that CB is not means tested! Not yet anyway.

Yup, which is why you need to understand the system so you can screw them before they screw you.

"A M L [Manchester England]" wrote

What on earth are you on about? Most self-employed people are liable to *both* Class 2 & Class 4 -- there is no choice in the matter!

"A M L [Manchester England]" wrote

What were you trying to say here? Self-employed people get taxed on their profit, whatever they (/you) want to call it.

Get yourself a bookkeeper or an accountant, it should cost you around £250- £400 per year. you can claim this against your tax, this what i did when i was self employed and it saves a lot of hassle.

"Tim" wrote in news: snipped-for-privacy@bt.com:

But NI class 1 and 2 are levied only on earnings, not profits. So if you want to avoid NI Class 2 (self employed) liability, take your earnings as profit.

"A M L [Manchester England]" wrote

You are very much mistaken.

In message of Thu, 25 Oct 2007, A M L [Manchester England] writes

If you're Self Employed there's no distinction between earnings and profits - it is the same thing. If you make a profit, they are your earnings for tax and NI (with certain adjustments for disallowables etc).

If you are Self Employed you pay Class 2 (unless you can claim exception on the grounds of low income), then if your profit/earnings/income (call it whatever you like - it's the same thing) is more than a certain amount you pay Class 4.

Class 1 is basically for employments not for the Self Employed.

DF

David Floyd wrote in news:0dyGkBBbGdIHFwwY@127.0.0.1:

You have to go through the legal fiction of setting up your own enterprise, working for it, and paying yourself 1p below an appropriate minimum for NI contributions.

Then take the surplus as profit, not liable to NI; rather than earnings, which are liable to NI.

In message of Sat, 27 Oct 2007, A M L [Manchester England] writes

You haven't got the foggiest idea what you're talking about.

Now reading between the lines it looks as though your thinking about what you can do by trading through a limited company.

I'm not going through other matters concerning Ltd Co trading, but on a tax point of view, if you're trading as a limited company then you're not self employed; you are an employee of the company and you pay Class

1 NI on your earnings (salary) above a certain amount. You can avoid this by paying a salary below this certain level and paying the rest as dividends. Whether this is a wise course of action is a different story.

Self Employed pay Class 2 AND Class 4 NI; no way out of it.

But don't try to say that Self Employed people can avoid NI in the way you say - YOU CAN'T. You're getting confused with Ltd Cos, and using the wrong terminology.

DF

"A M L [Manchester England]" wrote

A self-employed person is not allowed to "employ" him/herself, as you are suggesting. For a self-employed person, the "enterprise" as you put it (ie, the business) and the person are one-and-the-same.

To do as you suggest, you would need to set up a

*separate* entity -- such as a Limited Company -- and let *that* make the profit, after paying you a wage. [Also, your comments on Class 2 & Class 4 NI for s/e are mostly wrong...]

David Floyd wrote in news:e9cy0TD8zuIHFwml@127.0.0.1:

Oh.

I thought I learnt it from an accountant, one of the best people I know, with a sharp sense of humour.

A few months before their marriage, they were lying on the sofa in front of the telly. I walked in, put the dirty cutlery, crockery and empty packages on a tray, and was about to walk out when she said, "oh X, can we have him round when we're married."

He looked at me sternly and said in a commanding voice, "that'll be all Tom."

But if you insist.

"Tim" wrote in news:3-qdnfDrCqT1cr snipped-for-privacy@bt.com:

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Why are you contradicting me?

Is this contradiction for its own sake? Word pedantry?

"A M L [Manchester England]" wrote

Duh - because you are WRONG!

"A M L [Manchester England]" wrote

No - you're just plain WRONG.