If you are planning to claim the UK state pension, we urge you to check your national insurance (NI) record before 5 April 2023. Currently, voluntary contributions can be made to plug gaps back to April 2006, but this will be curtailed from April 2023.
If you are employed or self employed, National insurance contributions are made by you based on your earnings. You may also receive NI credits if you are eligible. These NI contributions or credits make up your NI history, which may affect your entitlement to the state pension as well as other benefits, such as employment and support allowance.
To qualify for the maximum ‘new state pension’ (received by those retiring on or after 6 April 2016) you must have 35 qualifying years of NI contributions. For part payment of the ‘new state pension’ you must have contributed for at least 10 years. If your NI record started before 6 April 2016, different rules may apply; the number of required years of NI contributions/credits to obtain the full state pension may be higher.
If you have not contributed enough prior to reaching state pension age, you may not be able to claim state pension, or receive the full state pension amount. To protect state pension and other benefits it may be beneficial for you to make voluntary NI contributions to top up your contribution history, potentially increasing the amount of state pension you will receive.
Normally, it is only possible to make voluntary contributions for the past six tax years. Currently there is an extension in place allowing you to fill gaps in your NIC history from 6 April 2006 up to today’s date by making voluntary contributions.
However, from 6 April 2023, the timeframe for making voluntary contributions will revert to the normal six years. This means that in the 2023/24 tax year, it will be possible to make contributions going back to the 2017/18 tax year only.
You should therefore take the opportunity to check your NI record to identify any shortfalls in your NI history.
You are now able to sign up for a personal tax account with HMRC to view your qualifying years and state pension forecast https://www.gov.uk/personal-tax-account
If you are a taxpayer, you should also check that your record includes NI contributions paid through PAYE or self assessment, and NI credits earned. You should contact HMRC or us to have any errors corrected.
In summary you should take the following action before 5 April 2023:
- Identify any discrepancies between NI contributions paid and those showing on HMRC’s system
- Identify any NI credits that are missing from periods in which they should have been received (eg, on receipt of universal credit or child benefit)
- Identify any shortfalls in contributions
- Contact HMRC or us if you think there are any errors
- Decide whether to make voluntary NI contributions
Here to help
Please contact us to discuss any of the above.
If you know anyone who may benefit from our newsletters and updates, please feel free to forward this blog or ask them to opt in to our mailing list.