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Wise Mumsnetters can you help us decide about self employment versus national insurance credits?

(5 Posts)
gaelicsheep Sat 22-Oct-11 23:15:43

Basically I'm confused. DH is trying to set up a self employed business but he is also the main carer of our children (self employed work would be in evenings and weekends). It got going for a while but has kind of stalled as Christmas approaches and we are faced with a decision.

As I understand it, if registered as self employed he needs to either
a) pay Class 2 contributions, or
b) declare a low income (it will be!) and elect not to pay

But in the case of b) this will leave him unprotected for state pension purposes. Whereas at the moment he gets Home Responsilibities Protection (or whatever it's called now).

Am I correct that by trying to earn some extra money to fit around his childcare responsibilities he will lose the protection of HRP regardless of whether he actually earns or not? It seems unfair, but that doesn't surprise me. That being the case how do others handle this - is it worth the risk do you reckon when there's no guarantees of actually bringing in any money?

mranchovy Sun 23-Oct-11 01:21:06

In April 2010 HRP was replaced with National Insurance Credits. Qualification for either of these is based on whether your DH receives child benefit in his name for one or more children (under 12 for NI Credits or under 16 for HRP) - this should not be affected by working as self employed.

Having said that, Class 2 NI is only £2.50 a week and it is often worthwhile paying not just for pension credits but the other benefits it qualifies you for, although the most significant of these is Maternity Allowance which is not going to help your DH.

gaelicsheep Sun 23-Oct-11 01:24:17

Thanks for your reply. Was just about to go to bed so will consider properly in the morning. I gather then that it isn't an automatic shut off for NI credits once he registers as self employed - I had thought it was. We've talked about the £2.50 a week and paying it anyway. I guess the point is that he's trying to get work because we really need the money, so we don't want to end up even worse off if he doesn't get work for a couple of months. Sounds positive though from what you say, so thanks.

mranchovy Sun 23-Oct-11 11:22:15

Bear in mind that if you claim Working Tax Credit you need to decalre the additional income which may affect the amount you get, on the other hand if he works for 16 hours a week you may qualify for the Childcare Element (although it doesn't sound as though that would help).

Also whilst I believe that what I said about still getting credits if you are self employed but claiming exemption from Class 2 contributions is true, the system is new and the rules are very complicated and not very clearly published so it is probably worth confirming this with HMRC, DWP or a CAB.

gaelicsheep Sun 23-Oct-11 20:47:58

Cheers. We don't get WTC but do get CTC and would of course declare the additional income, such as it is. You're right the rules don't seem clear at all - hence my asking - so yes we will try to confirm before making any firm decisions. smile

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