The Lemon Fool

Posted: **July 23rd, 2021, 8:32 pm**

richfool wrote:Thought I would post an update to this in case anyone else is interested and thinking of paying voluntary NIC's. We have just discovered that the figures quoted for a particular year do in fact increase, presumably because we have passed into a new tax year (as I don't think the NIC rates have changed).

Upon rechecking the figures, (which we had previously obtained in January this year), prior to making a payment to HMRC, the amount required for the oldest year, of £795.60 has increased to £800.80. Subsequent years' totals have increased by similar small amounts, c £5.00 pa.

The cost for the current year class 3 NICs increases each April by the previous September's CPI figure.

The cost of class 3 NICs for the previous two tax years is frozen at the original rates for those years, and thereafter goes up to the same as the current year cost.

Posted: **September 8th, 2021, 9:37 am**

I take it that anyone paying voluntary NIC's will, from the year 2022/23 have to pay more because of the increase in the NIC rate to 13.25%, or is the extra 1.25% levy just temporary?!

I note also that if the state pension, plus any other pension income proves inadequate, when a pensioner reaches gets to pension age, forcing them to continue working, they will in future have to pay NIC on their earnings!

Posted: **September 8th, 2021, 10:01 am**

richfool wrote:I take it that anyone paying voluntary NIC's will, from the year 2022/23 have to pay more because of the increase in the NIC rate to 13.25%, or is the extra 1.25% levy just temporary?!

It is and is not temporary* and you take it incorrectly.

"The Levy will not apply to Class 2 or 3 NICs, protecting the lowest paid self-employed workers and people making voluntary contributions."

"The increase will not apply to Class 2 NICs (the flat rate paid by the Self-Employed with profits above the Small Profits Threshold, which is currently £6,515 per year) or Class 3 NICs (voluntary contributions for taxpayers to fill in gaps in their contributions’ records to qualify for benefits)."

Both from https://www.gov.uk/government/publications/build-back-better-our-plan-for-health-and-social-care/build-back-better-our-plan-for-health-and-social-care

* What's actually happening is that the govt is introducing a new 1.25% tax, The Health and Social Care Levy, which will be collected under that line item name from 2023-24 but will be implemented as a temporary increase to class 1 & 4 NICs for 2022-23. So, for 2022-23 employees will pay class 1 NICs of 13.25% and from 2023-24 they'll pay class 1 NICs of 12% and the H&SC Levy of 1.25%.

richfool wrote:I note also that if the state pension, plus any other pension income proves inadequate, when a pensioner reaches gets to pension age, forcing them to continue working, they will in future have to pay NIC on their earnings!

No, they will just have to pay the Health and Social Care Levy, i.e. just 1.25%, not 13.25%.

Posted: **September 8th, 2021, 10:29 am**

Thank you mc2fool for the clarifications.

What about someone who has emigrated to Australia, and is now paying vol NIC's here to qualify for a UK state pension.? Am I right in thinking they won't get any annual increases on that UK state pension once it starts being paid? And will that UK state pension still be taxed here, as it was earned here, even though they are now permanently resident in Australia?

Posted: **September 8th, 2021, 12:11 pm**

richfool wrote:Thank you mc2fool for the clarifications.

What about someone who has emigrated to Australia, and is now paying vol NIC's here to qualify for a UK state pension.? Am I right in thinking they won't get any annual increases on that UK state pension once it starts being paid?

Yes

richfool wrote: And will that UK state pension still be taxed here, as it was earned here, even though they are now permanently resident in Australia?

No. The UK-Oz double taxation treaty makes it taxable only in Oz.

Posted: **September 8th, 2021, 12:14 pm**

richfool wrote:What about someone who has emigrated to Australia, and is now paying vol NIC's here to qualify for a UK state pension.? Am I right in thinking they won't get any annual increases on that UK state pension once it starts being paid? And will that UK state pension still be taxed here, as it was earned here, even though they are now permanently resident in Australia?

I believe that's yes and maybe.

You can check the increases-if-you-live-abroad status at https://www.gov.uk/state-pension-if-you-retire-abroad/rates-of-state-pension, just in case that changes at any point.

For tax treatment, see https://www.gov.uk/state-pension-if-you-retire-abroad/tax-on-your-state-pension. I'll leave you to look up and plough through the double taxation agreement with Aus.

[Edit: genou beat me to it.

]

The Lemon Fool

Is it worth a part-time worker paying voluntary NIC's?

Re: Is it worth a part-time worker paying voluntary NIC's?

Re: Is it worth a part-time worker paying voluntary NIC's?

Re: Is it worth a part-time worker paying voluntary NIC's?

Re: Is it worth a part-time worker paying voluntary NIC's?

Re: Is it worth a part-time worker paying voluntary NIC's?

Re: Is it worth a part-time worker paying voluntary NIC's?