Lee Yip Pensioner Pays Contributions to the Pension Fund 2021

Should an individual entrepreneur pay insurance premiums?

The question of whether a pensioner of an individual entrepreneur should pay insurance premiums interests many. Previously, legislation did not exempt entrepreneurs from paying insurance premiums for themselves, even upon reaching retirement age. But the situation changed in 2019, with the adoption of a new bill proposed by the President.

What happened in 2021

The government has decided that individual entrepreneurs will no longer pay insurance premiums from January 1, 2021. Citizens who have reached retirement age and are registered as individual entrepreneurs are exempt from paying contributions for mandatory pension and health insurance. This innovation is all the more fair since these individuals have already fulfilled their duty to the state for mandatory insurance transfers to the Pension Fund.

The conditions for providing benefits imply a transition to the tax regime of a self-employed person, with a limit on total income during the year to no more than 2.4 million rubles.

This exemption applies exclusively to payments that entrepreneurs make for themselves. The need to pay contributions for recruited personnel remains in full.

Will they pay in 2021?

In 2021, the introduced cancellation of payment of insurance premiums was retained. Therefore, entrepreneurs who have reached retirement age do not need to make payments to compulsory pension insurance and compulsory medical insurance. This continues to apply to payments for yourself, and not for employed employees.

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Payments for injuries remained the same, without benefits or discounts.

The following categories of business entities can benefit from this exemption:

• Individual entrepreneurs working under a patent, since the cost of a patent does not depend on insurance premiums;
• entrepreneurs of the simplified system for the object “income minus expenses”; which is typical, the greatest benefit will be received by those individual entrepreneurs who have not made a profit from the business;
• businessmen on the simplified tax system and the single tax, for whom tax deductions do not exceed the amount of personal insurance contributions.

The differences in the profitability of the changes made are explained by the peculiarities of the Russian taxation system for different categories of entrepreneurs.

The State Duma abolished individual entrepreneur contributions from professional income from January 1, 2020

Starting from January 1, 2021, individual entrepreneurs will be able to completely avoid paying their own contributions to the Pension Fund and the Compulsory Medical Insurance Fund. To do this, it will be enough to switch to a new special regime for the self-employed. To do this, their annual income should not exceed 2.4 million rubles. Under the new special regime, you will not have to submit a declaration and pay pension contributions for yourself.

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The government accommodated the individual entrepreneurs and decided to cancel insurance premiums for retired individual entrepreneurs. According to the authorities, individual pensioners should not pay contributions for themselves to the Pension Fund, since throughout their working life they have fulfilled all obligations to the fund. At the same time, individual entrepreneurs’ contributions will be transferred only for hired workers; this obligation will remain.

What taxes do retired entrepreneurs need to pay?

With the exception of the cancellation of compulsory medical insurance and compulsory medical insurance premiums for certain categories of individual entrepreneurs (in relation to small and medium-sized businesses), these payers are required to pay:

• mandatory pension payments for recruited personnel;
• similar deductions for compulsory health insurance for employed employees;
• social insurance contributions against possible accidents at work (to the Social Insurance Fund) for yourself and employees on staff.

In addition to insurance premiums, individual entrepreneurs are required to pay taxes:

• the main ones provided for by the chosen taxation system;
• additional, depending on the type of activity performed.

The full composition of the assigned mandatory contributions is determined by the specified features of the work of an individual entrepreneur.

Insurance premiums for individual entrepreneurs will be frozen in 2021

For 2021, individual entrepreneurs, if their income is no more than 300 thousand rubles, will need to pay 32,448 rubles to insurance funds. Some businessmen can take advantage of the deferment provided for small and medium-sized businesses due to the pandemic. But this opportunity is only available to those working in industries identified as hardest hit by the coronavirus, such as hospitality or further education.

If contributions are not paid, supervisory authorities must forcibly collect the debt and penalties for late payment. This will affect the well-being of citizens and, in addition, will increase the burden on the tax authorities, the author of the legislative initiative believes.

Therefore, the deputy proposed expanding the list of grounds for temporary exemption from insurance premiums and prescribing special conditions for retired entrepreneurs who do not hire workers. If they suspend their activities by application for a period of six months to a year and do not receive income from business during this time, they will not have to pay insurance premiums for this period, it follows from the document that the Parliamentary Gazette has reviewed.

Are there any benefits for retired entrepreneurs?

In addition to the specified exemption for fixed insurance contributions for themselves, individual entrepreneurs of retirement age do not have other benefits regarding social insurance payments.

Support measures provided for by law include:

• abolition of the tax on real estate owned personally and not involved in business activities;
• additional preferences established by resolutions of local authorities.

For example, the Moscow government, by regional resolutions, provides for the provision to pensioners of:

• the right to free travel by public city transport (excluding taxis and minibuses);
• preferential (free of charge or with significant discounts) purchases of medicines according to prescriptions prescribed by doctors;
• discounts on travel on commuter trains.

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Certain subsidies are assigned to pensioners for paying for the services of utility organizations.

But otherwise, the legislation does not provide benefits for individual entrepreneurs of retirement age. On the contrary, while engaging in entrepreneurship, an individual entrepreneur retains the status of a working pensioner, which cancels the annual indexation of pensions as compensation for the adverse impact of inflationary processes.

It is also important to take into account that tax and insurance benefits are not provided for individual entrepreneurs who are pensioners in the event of being assigned a disability group.

Tax exemption

For clarity, we have presented a list of types of taxes from which SMEs are exempt, indicating payment periods, in the form of a table.

Order an electronic signature to receive a non-refundable subsidy from the state Submit an application

How many fees do you have to pay?

The amounts of mandatory fixed payments for themselves, which are made by those entrepreneurs who were not included in the number of those exempt from these insurance contributions in 2021, are (in thousands of rubles):

• according to OPS - 32,448, with an additional payment of one percent of the excess of the limit of 300,000 rubles. from the profit received per year;
• for compulsory health insurance – 8,426 (without setting limits).

For recruited employees employed by a pensioner individual entrepreneur on a permanent basis, the amount of insurance premiums is (indicated as a percentage):

• for compulsory pension insurance - 22, or 10 if the payment base exceeds 1,465 thousand rubles;
• for compulsory medical insurance – 5.1, with a maximum payment amount of 966,000 rubles;
• for social insurance – 2.9;
• for injuries - from 0.2 to 8.5 percent, taking into account the classification of the profession by degree of harm (taking into account the OKVED code).

Exemption from mandatory payments to the Pension Fund and the Compulsory Medical Insurance Fund for entrepreneurs who are pensioners is a reasonable measure that reduces the tax burden for certain categories of payers. But the degree to which such a benefit is beneficial for pensioners largely depends on the tax system chosen by the entrepreneur.

Retired entrepreneurs are proposed to be exempt from paying insurance premiums

True, such a benefit is possible under certain conditions and for a certain period.

Pensioners - individual entrepreneurs are proposed to be exempt from paying insurance premiums if they suspended their activities for six months to a year and did not receive income from the business. Natalya Kostenko, deputy chairman of the House Committee on Control and Regulations, plans to submit a bill providing for such a norm to the State Duma. The Parliamentary Gazette looked into the details of the deputy’s proposals.

Pension is not for contributions

Now the Tax Code already exempts individual entrepreneurs from paying insurance premiums during certain periods. For example, they do not need to make contributions to the Pension Fund and the Compulsory Medical Insurance Fund for the time when they serve in conscription, are on leave to care for a child up to one and a half years old, and in some other cases. To exercise this right, entrepreneurs must submit an application to the tax authority and provide supporting documents.

At the same time, there is no basis in the legislation to exempt a retired entrepreneur from paying contributions for a period when he could not conduct business for objective reasons: for example, he was sick or had to be in self-isolation and comply with restrictions introduced due to the coronavirus pandemic, she noted Natalya Kostenko. “Given that during the period of mandatory isolation, elderly entrepreneurs did not earn anything from their business, they will be able to pay mandatory contributions only from their only income today - a pension, the amount of which for many retired entrepreneurs does not exceed the subsistence level,” noted Natalya Kostenko.

What is the essence of the amendments

In accordance with the proposed amendments, it is planned to completely exempt citizens of retirement age with individual entrepreneur status from the obligation to transfer fixed contributions for pension insurance. Let us remind you that the amount of this amount, as for health insurance, is approved annually. Individual entrepreneurs are not required to pay social insurance contributions.

If the amendments are adopted, changes to tax legislation will come into force on July 1, 2019. From this moment, individual entrepreneurs will have to transfer pension contributions to the budget only for the income of hired personnel. Why was the date chosen July 1st? This deadline was not set by chance. This is the deadline for fulfilling obligations on fixed payments for 2021.

Consequently, in 2021, individual entrepreneurs will no longer transfer amounts under compulsory pension insurance. The amount of fixed contributions for 2021 has already been adopted and is (Law No. 335-FZ of November 27, 2017):

• Regarding medical payments – RUB 6884.00.
• Regarding pension payments – RUB 29,354.00. + 1% on income received by individual entrepreneurs over 300,000 rubles. The maximum amount of payments is limited to 234,832 rubles.

According to rough estimates, the implementation of this initiative by the Ministry of Economic Development of the Russian Federation will cost the Pension Fund budget 450 billion rubles. annually. It is already planned to allocate about 389 billion rubles. At the same time, despite the obvious cost savings, not all entrepreneurs will benefit from such innovations. For example, an individual entrepreneur under the imputed taxation regime has the right to reduce the calculated tax on contributions paid. If the obligation to pay pension amounts is canceled, you will have to transfer more tax to UTII.

Note! Consideration of the project is scheduled for September 2018. Additionally, the Ministry of Economic Development passport contains proposals for abolishing reporting for individual entrepreneurs on the simplified tax system. If the amendment is approved, perhaps the simplified declaration for 2021 will be the last for entrepreneurs.