National Insurance Contribution extended deadline

In a statement issued earlier this month, HM Revenue and Customs (HMRC) revealed that the deadline for National Insurance Contributions (NICs) would be extended again from the current 31 July 2023 until 5 April 2025. 

In order to get access to your state pension when you retire, you are required to pay at least 10 years’ worth of NICs. And for those wanting to claim the full amount of their state pension, 35 years’ worth of NICs are needed. That means if you have missed the odd year or two or have larger gaps where you haven’t made any NICs, now is the time to consider buying back those missing years.  

“The government intends to extend the deadline for eligible individuals to retrospectively fill gaps in their National Insurance record for the period covering April 2006 to April 2016. This extension means that people will have more time to fill gaps in their National Insurance record that may increase the amount they receive in State Pension.” - Victoria Atkins, Financial Secretary to the Treasury. 

What are National Insurance Contributions? 

National Insurance (NI) is an umbrella term for universal health care, unemployment benefits and the public pension program. 

National Insurance Contributions (NICs) are a form of tax that employees and employers pay to the Government through payroll deductions. NICs are paid automatically through the PAYE (Pay As You Earn) system, which deducts an amount based on a percentage of your income, and this generally continues until you reach retirement age. Employees are able to make additional voluntary payments to increase the pension amount that they will be entitled to receive.  

NICs are collected in order to fund various state benefits, such as the NHS and state pensions.   

The importance of plugging the gaps in your NIC history 

The reason why paying your NICs is so important is to do with how they relate to your state pension. In order to receive any kind of state pension at all, you need to have been making NICs for at least 10 qualifying years. And if you want to receive your full state pension, then you need to have been paying for a full 35 years. 

Many people will have gaps in their NICs where, due to being unemployed, in education, taking time off work after having children or simply not earning enough, they have not paid any NICs for one or more years. However, as it doesn’t matter which years that you’ve paid your NICs, only that you have enough years combined to qualify for a state pension, you can ‘plug the gaps’ by purchasing any years you’ve missed in order to make up the total.  

It may not seem worth it to some, but if you consider that buying back a single qualifying year of the NI at the standard rate of £824.20 would increase your pension by £275 per year for the rest of your life, it’s easy to see how quickly you will start seeing returns on your investment into your NIC.  

Don’t wait for the deadline to sneak up again as there’s no guarantee it will be extended a third time. Now is the time to take control of your NICs and make sure you have a healthy state pension when you retire.  

If you’d like further guidance about how you can plug your NIC gaps before the deadline falls, why not get in touch. You can book a free non-committal initial consultation where you can discuss your savings plans with one of our accredited advisers who will be happy to guide you through the process. Alternatively, you can give us a call on 0333 323 9065 to get in touch with a member of our team to find out more. 

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