voluntary contributions

[pauline66]

My husband and I are Directors in our company. We both have other income. I pay NI on my income but my husband (receives a pension - aged 41) does not. We do not take a salary from the company but purely an annual dividend. I am aware that he needs now to pay NI on a voluntary basis but have no idea how to do it, I have asked the local tax office and the paperwork they have sent is confusing and contradictory. Your assistance will be much appreciated.

[cranleys]

Hi Pauline

He will be able to pay on the voluntary basis but it is expensive.

It would be better to actually set up a sole trade and the NIC class 2 will only cost £2.10 per week opposed to £7! Perhaps he could do someone's garen for a small fee and save NIC in the same process.

Colin@cranleys.co.uk

01252 852220.

[tax me less!]

There are however slight differences in the benefits provided by Class 2 as against Class 3. A better answer would be obtained by getting a pension forecast so he can see what benefits might be obtained.

On a practical level, HMRCs helpline is usually very knowledgable so you may want to give them a call.

An alternative would be to pay a salary just at the minimum Class 1 level. That way he would be classified as lower paid so qualify for S2P which will give him twice as much in additional state pension. Your accountant can doubtless give the figures.

[King_Maker]

"An alternative would be to pay a salary just at the minimum Class 1 level. That way he would be classified as lower paid so qualify for S2P which will give him twice as much in additional state pension. Your accountant can doubtless give the figures." - tax me less.

The downside to this option is that he may be taxed at 22% (depending on the amount of his pension income), as I assume his Personal Allowances are fully utilised against his pension income?

[pauline66]

Thanks all, setting him up as an employee is not an option for various reasons. Does anybody know the number of the form he needs to apply?