At Hudson & McCullum we...drive your business forward

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At Hudson & McCullum we...drive your business forward

At Hudson & McCullum we...steer you in the right direction

New state pension and contracted-out NICs

What Our Clients Say

I used to think that all accountants were sleazy, blood sucking leeches. After 6 months’ worth of interaction with Irfan, I no longer believe this to be the case. It is a pleasure to have someone who genuinely has your own interest at heart. Irfan is honest, hardworking and punctual. all that you can ask for in an accountant. dare I say it…. even a friend!

"Rami Tanios (Director) " - Heritage Homes Limited

I found Irfan online after having a very negative experience with my first accountant and a distant and confusing one with the second. Irfan is easy to communicate with, quick to respond, professional and knowledgeable. He has taken the time and care to help me understand what I need to do and how best to do it in relation to my limited companies, VAT and self-assessment. I would highly recommend Irfan’s services.

"Rachel Cooke (BA MA Dip MNCP MNCH) " - Whitesobrite Limited

Irfan has handled my business for two years now. As someone who has difficulty remembering his own birthday, I needed someone who would make sure that all of my accounts were settled in time with HMRC and Companies House deadlines. Irfan has been relentless in ensuring I wasn’t late for important submission dates and for handling our payroll like clockwork. He has been an amazing resource and I would recommend anyone to hire him – especially if you’re just starting out and need someone reliable you can trust.

" Marc Quinn (Director) " - Powerlights Incorporated Limited

As someone who had newly formed his own start up, the most important thing for me was to find someone that could show me the ropes from an accounting standpoint, and low and behold Irfan was that guy. Irfan has been my accountant over the past 3 years and as a Client I could not be happier. Even though I tend to bombard him with questions and queries about letters/information I received from HMRC and companies house, he NEVER failed to get back to me and answer them in a timely manner. When it comes to finding solutions to accounting issues or coming up with the best personalized strategy to overcome paying more tax than I needed to, he delivered the goods. Dependable, reliable, patient and flexible are just some of the words I would use describe him. Thank you Irfan for all you have done…

"lan Michaels " - Locum Pod Limited (Podiatric Medicine)

Over the time we have worked with Irfan he has become a real asset to our company. With his help and guidance, he has looked after the company’s finances and advised us about how we can improve the company in specific areas and cut back in others. It has allowed us to understand our company in more detail and to get on with what we need to do to grow as a company, without worrying about all the financial issues which entail with running a business. His advice, understanding and professionalism is fantastic. Long may our working relationship continue.

James Hillman (Director & Fashion Designer) - James Hillman Limited

Since our company has starting working with Irfan, he has been a great asset for us. His services has been impeccable and his very approachable, proactive and efficient. He supports us with our bookkeeping, VAT, PAYE and corporate taxes. Hudson & McCullum has saved us lots of money on our taxes.

Karen Enoe (Director) - A.I.M.S Support Services Limited

Irfan is professional that goes beyond his mission and tasks. He honestly has tried first to understand me and my business. He has been flexible and devoted time with a high generosity. He has been able to adapt to my schedule and needs during the full year. Always open to serve and render his great expertise and knowledge. He is an expert accountant and is, at the same time, a great individual. I feel in the best hands. Always proactive and ready to support and teach. I a learning new accountancy concepts thanks to his patience. I am very thankful to have Irfan as a trusted partner in the U.K.

" Carolina Caparrós Alvarez (Director) " - Talento Direct Limited

Newsletter issue - July 2017.

Most people will be aware that the state retirement pension system has changed for people who reach state pension age on or after 6 April 2016 - that is men born after 5 April 1951 and women born after 5 April 1953. The full new state pension is currently £159.55 per week, but the amount that employees who have previously paid National Insurance contributions (NIC) at the contracted-out rate may be affected under the new system. The introduction of the new state pension from 6 April 2016 brought an end to the contracting-out rules.

In very broad terms, to qualify for the minimum amount of state pension an individual needs 10 years of NIC contributions. 35 years or contributions or credits will be needed to qualify for the full amount.

For those people who were already in the workforce at April 2016, transitional arrangements were put in place which means that everyone will be assessed for a 'starting amount' under the new system. Using the number of qualifying years on the individual's National Insurance record as at 5 April 2016, their 'starting amount' will be the higher of either:

Both amounts will reflect any periods when they have been contracted out of the additional state pension.

The rules governing contracting out and new state pension are complex, but broadly, if an individual has a 'starting amount' of less than the full amount of new state pension, then for each 'qualifying year', a certain amount is added to their National Insurance record after 5 April 2016. This equates to around £4.56 a week, (£159.55/35). This amount will be added to the person's 'starting amount', until they reach the full amount of the new state pension, or they reach state pension age, whichever happens first.

For some people it is possible to have a starting amount higher than the full new state pension if they have some 'additional' state pension. The difference between the full new state pension and their 'starting amount' is called a 'protected payment'. Those who have a 'starting amount' which is equal to the full new state pension will get the full new state pension when they reach state pension age. Before the new state pension was introduced, state retirement pension was made of two parts, namely:

If an individual was in what is known as a defined benefit company pension scheme - where what they are paid in retirement is related to salary - they are likely to have been 'contracted out' of the additional state pension. This means that they would have paid a lower rate of NICs and will have earned replacement pension benefits in an employer scheme or a personal pension.

Despite having what they thought were 35 years of qualifying years, they will not necessarily get the full amount of new state pension - although entitlement can be improved by paying contributions after 5 April 2016. The Government has advised that while someone in this situation will get less than the full amount, retirees will still be paid at least what they would have got under the old state pension.