A question about : Class 2 NIC exemption (SEE) and loss of state pension?
I'm employed full-time and pay tax and NI through PAYE.
I've just started (two days ago!) selling some greeting cards that I make in my spare time. It's just a little hobby thing - I'll be lucky to make a couple of hundred quid a year from this.
Obviously I now need tell HMRC and pay income tax on the profit, and possibly some NI.
Now comes the question. Because of the size, I'd only be liable for Class 2 NI and not Class 4. Class 2 = Ј2.75 a week.
It's really not worth me paying this and I'll be well under the threshold so can apply for a Small Earnings Exemption so that I don't have to pay the Class 2 NI contributions.
However, on this page:
https://online.hmrc.gov.uk/shortform...ww.hmrc.gov.uk
It says that if I apply for SEE then I may lose benefits including the state pension.
How do I know if the exemption will affect my state pension or not? Obviously I'm not going to bother selling a few cards if I then don't get my state pension when I retire in 40 years!
The page just says it may affect your pension. It doesn't have anything about the circumstances in which it would or wouldn't affect it.
Best answers:
- If you do not pay NI you will not get credit for that year towards the years to count for your state pension.
If you are already paying class 1 contributions through your main employment then you are covered and will not get anything extra for paying class 2. - I'd picked up the "may" - just wasn't clear on when it may or may not apply.
Thanks! I assumed that I wouldn't lose my state pension when I've been employed PAYE most of my life, but just checking.
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