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UK Budget - Class 2 NICs to be abolished

UK Budget - Class 2 NICs to be abolished

Old Mar 20th 2015, 9:41 pm
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Default Re: UK Budget - Class 2 NICs to be abolished

Originally Posted by nun
Before the 1990s voluntary N I was paid as Class 3. I made a number of payments at that higher rate and then the law changed to allow Class 2 voluntary payments. I'm no sure why, but it was a great deal
For the government, budget wise it doesn't make much sense for expatriates unless there was some problem they were trying to solve.
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Old Mar 27th 2015, 12:10 am
  #62  
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Default Re: UK Budget - Class 2 NICs to be abolished

I've never really been clear how it came about either, especially given that you just fill in a piece of paper with your employer details that HMRC has zero way of checking.

I've been constantly astonished for years by it.

Frankly I'm astonished by the whole concept of voluntary NI payments at all, I know lots of countries have ways of paying in for maybe 5 years for people transferred abroad, but with voluntary NI you only need 3 years residency then you can carry on contributing, it's bizarre really.

I guess I'm so used to getting shafted by the government, it all seems quite unbelievable. I'm sure they'll move the goalposts again before I'm able to claim it though.

Class 3 might be more, but almost any idiot can establish three years of resident contributions, I assume foreign students can do it for example.

What I would prefer tbh would be a way of transferring the contribution years to the local equivalent, e.g. CPP in Canada.

I can see it being just as much a pain to get the money as it is to pay it in.
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Old Mar 30th 2015, 2:41 pm
  #63  
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Default Re: UK Budget - Class 2 NICs to be abolished

FYI here is an email I just got from HMRC regarding the effects of the changes to NI proposed in the budget on expats currently paying Class 2 voluntary NI

" I apologise for the delay in replying to you. I can confirm that people in the scenario described below will not be impacted by the changes. You will continue to receive a bill on an annual basis.

kind regards"

I have emailed back asking specifically if Class 2 NI will remain in place for expats and the billing rate.
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Old Mar 30th 2015, 3:08 pm
  #64  
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Default Re: UK Budget - Class 2 NICs to be abolished

Originally Posted by nun
FYI here is an email I just got from HMRC regarding the effects of the changes to NI proposed in the budget on expats currently paying Class 2 voluntary NI

" I apologise for the delay in replying to you. I can confirm that people in the scenario described below will not be impacted by the changes. You will continue to receive a bill on an annual basis.

kind regards"

I have emailed back asking specifically if Class 2 NI will remain in place for expats and the billing rate.

Unfortunately the proposed abolition is just a proposal so we won't know for sure if it will happen or whether there will be a provision for us expats until next year at the earliest.

Ni class 2 will continue as normal for us until then.
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Old Mar 30th 2015, 3:28 pm
  #65  
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Default Re: UK Budget - Class 2 NICs to be abolished

Originally Posted by jb82
Unfortunately the proposed abolition is just a proposal so we won't know for sure if it will happen or whether there will be a provision for us expats until next year at the earliest.

Ni class 2 will continue as normal for us until then.
I just got a second email from HMRC here is the full exchange starting with my first email.

I pay Class 2 voluntary National Insurance as a UK citizen living overseas and working for a foreign employer.
Can you please explain the effect on me of the proposed changes to Class 2 NI mentioned in the 2015 Budget and outlined
here

https://www.gov.uk/government/upload...class2-nic.pdf

Will I continue to be bill annually by HMRC for Class 2 voluntary contributions?
HMRC reply

I apologise for the delay in replying to you. I can confirm that people in the scenario described below will not be impacted by the changes. You will continue to receive a bill on an annual basis.

kind regards
Thanks for your reply. It’s good to know that I’ll still be billed. Will I continue to be billed at the Class 2 NI rate? or will some new rate apply? Also will the NI give me the same benefits as
those under the current Class 2 NI?

Regards
Yes you will be billed at the current rate and there are no changes to the benefits you are entitled to.
When I get my bill I'll post the amount. HMRC don't mention the Class I'll be paying specifically so we'll see.

Last edited by nun; Mar 30th 2015 at 3:32 pm.
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Old Mar 30th 2015, 4:05 pm
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Default Re: UK Budget - Class 2 NICs to be abolished

I think you are getting confused (probably my fault!).

the changes in the budget that you asked the hmrc about in your email is just to move the collection from direct debit /paying a bill yearly to being collected via self assessment- expats will continue to get a bill and pay it as normal or pay by direct debit. No change for us. These are still class 2 for everyone.

The other change that was proposed was to totally abolish class 2 nics which the current government announced as a pre-election sweetener. This is just a pledge by the current government (if they win)and details have not yet been worked out. So we'll have to wait and see who wins the election and what and when and if changes will be made.

So at present there is no change for us.
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Old Mar 31st 2015, 10:54 pm
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Default Re: UK Budget - Class 2 NICs to be abolished

I keep trying to decide whether to pay voluntary contributions or not. I have 26 yrs of contributions in the UK, and will have 24 yrs in the US social security by 2022, but the more UK Pension that l get, will mean that more is taken from my social security by WEP, right ? Or have l got that wrong ? I confess l really don't understand fully how WEP works or how much it's going to cost me. If only l knew how long l was going to live !!
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Old Mar 31st 2015, 11:17 pm
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Default Re: UK Budget - Class 2 NICs to be abolished

Originally Posted by flbrit59
I keep trying to decide whether to pay voluntary contributions or not. I have 26 yrs of contributions in the UK, and will have 24 yrs in the US social security by 2022, but the more UK Pension that l get, will mean that more is taken from my social security by WEP, right ? Or have l got that wrong ? I confess l really don't understand fully how WEP works or how much it's going to cost me. If only l knew how long l was going to live !!
Wep doesn't take into account voluntary contributions so any extra you pay as voluntary Ni will not affect your us social security.

As it stands you'll lose about $240pm of us social security due to wep and that will not change due to more voluntary contributions.

So if that is your only concern go for the voluntary contributions.

Last edited by jb82; Mar 31st 2015 at 11:20 pm.
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Old Apr 1st 2015, 12:56 am
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Default Re: UK Budget - Class 2 NICs to be abolished

Originally Posted by jb82
Wep doesn't take into account voluntary contributions so any extra you pay as voluntary Ni will not affect your us social security.

As it stands you'll lose about $240pm of us social security due to wep and that will not change due to more voluntary contributions.

So if that is your only concern go for the voluntary contributions.
Oh ok thanks. $240 is less than l thought too. Much appreciated !
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Old Apr 1st 2015, 1:05 am
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Default Re: UK Budget - Class 2 NICs to be abolished

Originally Posted by flbrit59
Oh ok thanks. $240 is less than l thought too. Much appreciated !
I did assume in all of your us years you made over whatever limit they had at the time for earnings. Eg for 2015 you needed to make $22k ish for that year. If you didn't for any year you'd be weped more. The closer you are to working 30yrs in the US the less wep will apply.

I think my calculation is right but don't quote me. It also is based on 2015 figures so will change by the time you reach retirement.

1st part of SS no wep $832*90%= $748.8pm
1st part with 24 yrs With wep $832*60%= $499.20
max amount lost to WEP $748.8-499.2=$249.60per month

See
http://www.ssa.gov/pubs/EN-05-10045.pdf

Last edited by jb82; Apr 1st 2015 at 1:14 am.
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Old Apr 1st 2015, 2:54 am
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Default Re: UK Budget - Class 2 NICs to be abolished

Originally Posted by jb82
I did assume in all of your us years you made over whatever limit they had at the time for earnings. Eg for 2015 you needed to make $22k ish for that year. If you didn't for any year you'd be weped more. The closer you are to working 30yrs in the US the less wep will apply.

I think my calculation is right but don't quote me. It also is based on 2015 figures so will change by the time you reach retirement.

1st part of SS no wep $832*90%= $748.8pm
1st part with 24 yrs With wep $832*60%= $499.20
max amount lost to WEP $748.8-499.2=$249.60per month

See
http://www.ssa.gov/pubs/EN-05-10045.pdf
Yes you're correct. Thanks once again, that's very helpful..l wouldn't have had a clue how to work that out ! I've read a lot of stuff on WEP but could never really work out the actual figures that apply in my particular case, as you have. That's great, thanks.
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Old May 9th 2015, 3:40 pm
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Default Re: UK Budget - Class 2 NICs to be abolished

I currently pay NI Class 2's from Canada, but due to a small amount of income in the UK, I need to submit self assessment returns each year. I have not received any letters from HMRC yet and continue to pay via monthly direct debit.

Is anyone in the same boat? Does anyone know if they will stop my direct debit and let me pay yearly via invoice, or will it be through self assessment now for me?

I'm a bit worried they will treat me as self employed and due to the small UK income I will be under the threshold for NIC payments, but then will not give me qualifying years as I'm abroad. Will pay Class 3's if I need to, but trying to figure out my Class 2 situation. I only have about 10 qualifying years right now, so have a long way to go!
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Old May 9th 2015, 3:56 pm
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Default Re: UK Budget - Class 2 NICs to be abolished

Originally Posted by boredmonkeyman
I currently pay NI Class 2's from Canada, but due to a small amount of income in the UK, I need to submit self assessment returns each year. I have not received any letters from HMRC yet and continue to pay via monthly direct debit.

Is anyone in the same boat? Does anyone know if they will stop my direct debit and let me pay yearly via invoice, or will it be through self assessment now for me?

I'm a bit worried they will treat me as self employed and due to the small UK income I will be under the threshold for NIC payments, but then will not give me qualifying years as I'm abroad. Will pay Class 3's if I need to, but trying to figure out my Class 2 situation. I only have about 10 qualifying years right now, so have a long way to go!
Not sure this is the same as your situation, or of much use, but my missus pays Class 2 contributions on an annual basis. She hasn't rec'd her usual letter outlining how much to pay so 'phoned them yesterday to ask why. They stated that they "had a problem with the letters" and "hoped they'd be sent out in June". They don't always inspire confidence as they also said if we'd not heard by June to call them again

The only income she receives from the UK is savings interest, paid out gross as a non-uk resident, hence we've never had to submit self assessment returns to them.
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Old May 10th 2015, 4:04 pm
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Default Re: UK Budget - Class 2 NICs to be abolished

Originally Posted by Luckyone
Not sure this is the same as your situation, or of much use, but my missus pays Class 2 contributions on an annual basis. She hasn't rec'd her usual letter outlining how much to pay so 'phoned them yesterday to ask why. They stated that they "had a problem with the letters" and "hoped they'd be sent out in June". They don't always inspire confidence as they also said if we'd not heard by June to call them again

The only income she receives from the UK is savings interest, paid out gross as a non-uk resident, hence we've never had to submit self assessment returns to them.
Cool thanks. I will try to give them a call soon, as maybe the letter was "lost in the mail" :-)

I have income I have to declare through self assessment, so hopefully they have thought of this situation and let me continue to contribute Class 2's from abroad, but not the end of the world if I have to go to Class 3.
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Old May 11th 2015, 2:27 pm
  #75  
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Default Re: UK Budget - Class 2 NICs to be abolished

I had reason to talk to HMRC last week, and they asked me to write a letter with some information to the self-assessment team. They did say however that the backlog to dealing with letters is running at 8 weeks, and they deal with them strictly on a 'date received' basis.

So, it will take a couple of months just to get round to reading anything you've sent them.
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