NEWSLETTERS

National insurance update – don’t lose out

Published 27th March 2017

To qualify for the full UK pension the current rules require you to have 35 years contributions paid or credited to your account.

If you are overseas and not paying the voluntary Class 3 contribution you may be losing one or more years when there could be a credit on your account. The current rate is £14.10 per week.

Most parents know that you are not eligible for child benefit if either you or your partner has income over £50,000. But by not claiming the benefit the mother could lose out on the credits to her National Insurance account. By making a claim for Child Benefit and then ticking the box that says “do not pay me” the mother will be credited with National Insurance Contributions from the birth of the first child to twelve years from the birth of the last child.

The rules for the payment of Maternity Allowance have not quite caught up with the reforms to the way Class 2 NIC is collected. Up to 5th April 2015 Class 2 NIC was collected by direct debit. When a taxpayer applied for the Maternity allowance the Department of work and Pensions would check the contribution record and if payments were sufficient to qualify (13 out of the last 66 weeks before the baby is due), payment was made for up to 39 weeks. Since 5th April 2015 Class 2 NIC has been collected with Self-Assessment tax in January and July each year. This means that the contributions for one tax year may not be credited to your account until the January most of the way through the following tax year and If an application is made for Maternity Allowance it will frequently be found that the payment record does not meet the criteria even though the taxpayer has made all payment on time under the “new” rules. If this happens to you, do not accept rejection or a reduced amount. Write and explain the position. The DWP has been made aware of the problem and will take the necessary action.

The newsletters on this website are believed correct at the time of publication. They may not include subsequent changes in the law. If the subject matter is of interest you should contact us to see if there is a relevant update.

Taxation is a complicated subject and is subject to change. This article is provided for general guidance only. You should only rely on advice prepared specifically for you. Neither the writer nor Landlords Tax Services Ltd can be held liable for any loss arising from any act or omission by you as a result of your understanding of this article.

Landlords Tax Services Ltd, specialises in the taxation of residential property income and gains and around half its clients are resident outside the UK. If you would like specialist help contact Maurice Patry F.C.A. at maurice@landlordstax.co.uk or for more information visit our website at Landlords Tax Services Ltd