# Social Security and National Insurance



## celticweb (Mar 26, 2016)

Hello everyone

I have more questions now this time regarding national insurance and social security. I was searching online and not clear what the rules are and hope some of you kind people might know.

I spent my whole adult life in the UK so only ever paid national insurance contributions through an employer. However I may be leaving my job later this year. So part of this 2016 year I will be unemployed, my UK partner partner earns so no need to rush back into employment for the remainder of the year once i leave my job. 

We have joint rental income from our starter flat, we upgraded to a house 10 years ago and just rent our first flat out (we are filing self assessment for that). So what happens after I leave my job? Would I automatically have to start paying social security if I'm not working for an employer or as self employed just receiving some rent or do i need to opt out? I am not interested in paying into the US system. What about if I go self-employed later on? Do i need to opt out of social security then? if yes how does one go about doing this. Everything becomes more of a mine field or confusion every day.

Hopefully some of you kind people can give me the facts if you know the answer.

thanks


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## BBCWatcher (Dec 28, 2012)

Nope. Unemployed people without earned income don't pay U.S. Social Security contributions, inside or outside the United States, self-employed or not.(*) Moreover, the U.K. and the U.S. have a social security treaty, so even if you're self-employed in the U.K. you don't have to make U.S. Social Security contributions provided you're making U.K. NI contributions.

That said, your instinct may not a good one, actually. "If only you were so lucky." U.S. Social Security is a _fantastic_ program for those who can get a couple years (or more) into it at relatively low (but non-trivial) contribution levels -- much better than U.K. NI. It's actuarily designed to be very generous to relatively low wage contributors, especially those with non-contributing spouses (same sex or opposite sex, and not necessarily in the present but at least in the future when retired). So if you are or appear to be in that cohort from the perspective of U.S. Social Security, and if you are required to contribute into that system, that's not a bad thing at all. You tend to get much more from the system than you put into it in such circumstances.

(*) "Arguable" Medicare exception: the Net Investment Income Tax. That's really a passive income surtax even though it's earmarked for Medicare from a funding perspective. If you have to pay only the NIIT it doesn't help you qualify for U.S. Medicare. You have to hit fairly high income levels to owe any NIIT -- possible if you're unemployed but not particularly common.


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## celticweb (Mar 26, 2016)

Thank you BBCWatcher
You always seem to know about every subject. What an asset to the forum.

So are you saying even if I pay something like 5 years into the Social Security system I can get something out of it later on? I am not trying to get something I don't deserve, just trying to find out if I deserve something with so little contributions.

I am not that keen to be paying two sets of national insurance/social security. can't really afford that to be honest so really has to be worthwhile.

thank you.


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## Bevdeforges (Nov 16, 2007)

Whoa - I don't think you're considered "self-employed" if you're just renting out a single flat (whether in the UK or back in the USSA). Paying into US Social Security from overseas is generally a matter of being "self-employed" within the US definition of the term. And if you are, then you pay double (i.e. 15% or so - both employer and employee portions) rather than just the 7.5% or whatever it's up to these days.

I'm also not sure that you get to choose whether or not you contribute to US Social Security from overseas. Especially from a country that has a Social Security treaty with the US.

You may want to start here: https://www.irs.gov/Businesses/Smal...oyment-Tax-Social-Security-and-Medicare-Taxes
Cheers,
Bev


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## celticweb (Mar 26, 2016)

Hi Bev

You're right, I would not consider myself self employed just renting out the one flat. However I am leaving my employed job this year in the summer. It's something I have wanted to do since January due to change of management there.

If I start working again afterwards (not before taking a break though), it may be as self employed. That's why I asked the question. By searching online, I did find out some other information about where to apply for a certificate of coverage (form UK/US 1) from the United Kingdom. I also found out that I probably won't even need it and be exempt under the treaty anyway.


Thanks Marie


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## BBCWatcher (Dec 28, 2012)

celticweb said:


> So are you saying even if I pay something like 5 years into the Social Security system I can get something out of it later on?


As few as a couple, assuming you hit at least 10 years total when considering earnings histories in social security treaty countries. (The U.K. is one of those countries.)

Much of Europe has a reputation of having strong social insurance programs, but this one is something of an exception. U.S. Social Security is rather good and probably better than the typical European program. The low minimum qualification threshold for retirement benefits (10 years, but up to 8.5 of those years can be from treaty countries) is one of the very nice aspects of the system. The spousal benefit is great, too, and got greater recently with the addition of same sex spouses as qualified beneficiaries.


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## Bevdeforges (Nov 16, 2007)

The point is still that you don't get to choose which system to pay into. If you are operating a business in the UK, then you pay into the UK social security (i.e. social insurances) system. There isn't an option to pay US SS voluntarily if you're so inclined (though I suppose TPTB won't refuse your contribution). 

And that counting of foreign credits goes both ways. Come retirement time, the UK (as a SS treaty country) will count your years (or technically, quarters) in the US system, too. (Not sure how they handle credit for any doubled time - i.e. if you have the maximum time in under the UK system for a given year and paid into US SS too, I think they won't count the US time.)
Cheers,
Bev


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## BBCWatcher (Dec 28, 2012)

Well, you still get to choose your employment (and self-employment) locations, at least within countries where you have work permission. Those choices then have implications in terms of social insurance contribution obligations and the fruits of those contributions.

But sure, once you have made a particular choice then, generally, you don't get to choose where your contributions go or how much those contributions must be.


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