Although changes to taxation rarely coincide with the start of a new tax year, it still holds importance for those who are self-employed.
If you are self-employed as a sole trader and earned over £1,000 (before tax relief deductions) in the last 12 months, HMRC will send you a letter requiring you to fill out a tax return for 2022/23.
The same applies if you were a partner in a business partnership during the 2022/23 tax year. However, the deadline for your return will not be until next January, unless sent via post.
If you have recently become self-employed, you must register with HMRC for tax and National Insurance purposes. Starting from April 6th, you must begin collecting business receipts and bank statements to complete your first tax return next year.
National Insurance Contributions (NICs) are payments made to the government that determine the amount of state pension one is eligible to receive. The government sets aside these contributions for state benefits and handouts.
When do you start making NICs?
You may also make voluntary contributions to avoid gaps in your National Insurance record while living abroad, which may assist you in avoiding reductions in your state pension benefits later in life.
Your payments will protect:
The amount you contribute to NICs is determined by your employment status, earnings, and personal situation. Your contributions cease when you reach state pension age, which is presently set at 66, but will increase to 67 in 2026.
You must have made at least 35 years of NICs to be eligible for the full pension amount. The amount you receive is based on a sliding scale between ten and thirty-five years. For instance, if you have ten years of NICs, you will presently receive £52.90 per week in state support, while if you have thirty years of contributions, you will receive £158.70 per week. Many expatriates do not meet this requirement. Fortunately, there is a solution - you can pay to make up for missed years.
If you've been living and working abroad you can pay a voluntary NI Class 2 contribution,
If you've been living abroad but not working you can pay a voluntary NI Class 3 contribution,
By catching up on missed contributions through Class 2 payments, a typical married couple could increase their retirement income by over £19,000 with a full U.K. State Pension as U.K. residents.
If you have been making contributions prior to April 6th, 2016, your NICs record will be utilised to determine your "starting amount." This figure is the higher of either the amount you would receive under the prior State Pension regulations (which includes Basic State Pension and Additional State Pension) or the amount you would receive if the new State Pension had been in place when you began working.
The new State Pension is claimable overseas in most countries.
Your State Pension will increase each year but only if you live in:
Your new State Pension may be affected if your circumstances change. You can get more information from the International Pension Centre.
If you are considering making voluntary contributions to your National Insurance, please do not hesitate to contact our Private Wealth Manager, Elmira Donald at email@example.com or Whatsapp here. She will be able to provide you with the necessary form and an example to guide you through the process.
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