National Insurance Contributions (NICs) are payable by almost every worker and employer throughout the UK. They are an important deduction from your salary as the amount of Class 1 NICs you’ve paid throughout your lifetime affects your rights to the state pension. Likewise, those who are self-employed need to pay Class 4 NICs in respect of their entitlement to the state pension.
You need to have at least ten qualifying years of NIC payments to receive the lowest amount of pension, with 35 qualifying years to be entitled to the full state pension. A qualifying year is one where you have received the minimum amount of earnings or credits – usually this is earning (or being credited with) an amount equivalent to the Lower Earnings Limit for employees or the Small Profit Threshold for the self-employed.
Some people may believe they have the required number of qualifying years. However, this may not be the case for a number of different reasons, such as having a break between employments, or working part-time hours. Therefore, it is recommended that you check your National Insurance history with HMRC to confirm your current position.
If you discover that you have any gaps in your contribution history for the years ended from 5 April 2006 to 5 April 2023, you may be able to rectify the position by making voluntary Class 3 NICs payments.
Ordinarily, you would only be able to correct the previous six years. However, the government extended the period you could correct for more years, as per the dates above, so that as many people as possible could maximise their state pension entitlement.
There have been a number of deadlines set this year alone by which these voluntary contributions needed to have been made, the last of which was 31 July 2023. However, the government has just extended the deadline date again to 5 April 2025, giving you even more time to check your history and, where needed, make any voluntary contributions.
Make sure you get all the state pension to which you’re entitled by checking your contribution history and making voluntary contributions where needed.
If you need any assistance or advice on this topic, please contact our Tax Advisory department.