Do you pay NI if you earn under the threshold to pay tax ?
Discussion
NI threshold is not linked to income tax threshold.
You start paying it at £8,060.
https://www.gov.uk/guidance/rates-and-thresholds-f...
You start paying it at £8,060.
https://www.gov.uk/guidance/rates-and-thresholds-f...
Eh, what ?!
So if I've been earning 10K through rental income of my house and earning nothing else, I will have paid no tax but should have paid some NI ?
When I did my tax return it says NIL to income but didn't ask for anything else ? How do I pay NI then if I have to ?!
(So is it actually better for me to earn under the 8K ?!)
So if I've been earning 10K through rental income of my house and earning nothing else, I will have paid no tax but should have paid some NI ?
When I did my tax return it says NIL to income but didn't ask for anything else ? How do I pay NI then if I have to ?!
(So is it actually better for me to earn under the 8K ?!)
SimonTheSailor said:
Eh, what ?!
So if I've been earning 10K through rental income of my house and earning nothing else, I will have paid no tax but should have paid some NI ?
When I did my tax return it says NIL to income but didn't ask for anything else ? How do I pay NI then if I have to ?!
(So is it actually better for me to earn under the 8K ?!)
NI is chargeable on EARNED income. "Earned Income" is defined as income you get from doing work i.e. salary income from a job, self employment profits from a business etc.So if I've been earning 10K through rental income of my house and earning nothing else, I will have paid no tax but should have paid some NI ?
When I did my tax return it says NIL to income but didn't ask for anything else ? How do I pay NI then if I have to ?!
(So is it actually better for me to earn under the 8K ?!)
NI is never charged on INVESTMENT income. "Investment Income" is defined as money generated from an asset you own - such as dividend income (from shares), interest received on bank and building society accounts and rental income (income from from land and property)
NI and tax are very different animals with completely separate sets of rules, regulations and allowances.
People sometimes say that UK taxation should be simplified and one of their favourite calls is that NI should be abolished and the missing government revenue taken up by increased taxes. But you can see that this would be very tricky because many types of income are simply not caught in the NI net.
Edited by Eric Mc on Wednesday 12th July 00:06
If you are self employed (this means income from a self employed trading activity (NOT a buy to let landlord), you are liable to pay two types of NI.
Class 2 is a relatively small amount which for decades was collected either monthly or quarterly by cheque or direct debit. For 2016/17 it is £148.20 per annum (so fairly low). It is Class 2 that generated your entitlement to the state pension.
The quarterly, direct debit payment system is now ended and since tax year 2016/17, Class 2 is collected as part of the annual Self Assessment tax payment.
Class 2 is being discontinued from tax year 2018/19.
The other NI paid by self employed individuals is Class 4. Class 4 is a much higher amount and for tax year 2017/18 is calculated as being 9% of your taxable net profit over £8,164 and under £45,000. Profits over £45,000 are subject to a 2% Class 4 NI charge.
Even though it is a much higher amount to pay, Class 4 NI has never counted towards your state pension etc. This is changing in tax year 2018/19 but it will probably increase at the time. Part of Hammond's aborted effort to increase Class 4 NI for tax year 2017/18 was in anticipation of this.
And that just shows how politically tough it is for Chancellors to make any significant changes to tax and NI.
Class 2 is a relatively small amount which for decades was collected either monthly or quarterly by cheque or direct debit. For 2016/17 it is £148.20 per annum (so fairly low). It is Class 2 that generated your entitlement to the state pension.
The quarterly, direct debit payment system is now ended and since tax year 2016/17, Class 2 is collected as part of the annual Self Assessment tax payment.
Class 2 is being discontinued from tax year 2018/19.
The other NI paid by self employed individuals is Class 4. Class 4 is a much higher amount and for tax year 2017/18 is calculated as being 9% of your taxable net profit over £8,164 and under £45,000. Profits over £45,000 are subject to a 2% Class 4 NI charge.
Even though it is a much higher amount to pay, Class 4 NI has never counted towards your state pension etc. This is changing in tax year 2018/19 but it will probably increase at the time. Part of Hammond's aborted effort to increase Class 4 NI for tax year 2017/18 was in anticipation of this.
And that just shows how politically tough it is for Chancellors to make any significant changes to tax and NI.
OP within the govt Gateway there is a section if you search for it regarding state pension forecast. It then lists all the years you were applicable for NI payments and highlights any missing years.
It takes a few minutes to find out and you'll either be relieved or missing a few years ~ which you might make up anyway as you only currently need 35 qualifying years so might have enough working life left. From memory you can go back 6 years and pay a lump sum for missing years there is a calculation on Martinlewis money saving expert which will give you an indication of if it's worth doing or not.
Personally I'm going for the full 35 qualifying years to remove any doubt of full state pension as the rules currently stand. Plus I like paying in for hose less fortunate so hat they too can have a state pension of sorts. I too would also back pay for any missing years as a lump sum - why? Basically to remove the requirement to potentially work for longer than I need to to obtain max state pension.
It takes a few minutes to find out and you'll either be relieved or missing a few years ~ which you might make up anyway as you only currently need 35 qualifying years so might have enough working life left. From memory you can go back 6 years and pay a lump sum for missing years there is a calculation on Martinlewis money saving expert which will give you an indication of if it's worth doing or not.
Personally I'm going for the full 35 qualifying years to remove any doubt of full state pension as the rules currently stand. Plus I like paying in for hose less fortunate so hat they too can have a state pension of sorts. I too would also back pay for any missing years as a lump sum - why? Basically to remove the requirement to potentially work for longer than I need to to obtain max state pension.
Welshbeef said:
Personally I'm going for the full 35 qualifying years to remove any doubt of full state pension as the rules currently stand. Plus I like paying in for hose less fortunate so hat they too can have a state pension of sorts. I too would also back pay for any missing years as a lump sum - why? Basically to remove the requirement to potentially work for longer than I need to to obtain max state pension.
They'll means test the state pension away by the time you are eligible to draw it Welshy, but thanks for paying for me!! 
GT03ROB said:
They'll means test the state pension away by the time you are eligible to draw it Welshy, but thanks for paying for me!!
Lol very likely but you can only play he game to the best knowledge you have at the time. I'm expecting qualifying years to increase to 40/45 by the time I retire to reflect increasing life expectancy plus the higher costs.
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