If you were planning to fill the gaps in your national insurance contributions (NICs) record by 31 July, you no longer need to rush or worry – you now have until 2025.
As is often the case with financial deadlines, publicity in the form of press stories and subsequent public awareness often arrive late in the day, and in the case of voluntary NICs, this has caused the Department for Work and Pensions and HMRC to reassess its July deadline.
Back on 7 March, the government was forced to extend the deadline from 5 April to 31 July. In addition, the Treasury said that all voluntary contributions would be payable at 2022/23 rates – a useful perk when the main voluntary rate (Class 3) was raised by 10.1% for 2023/24 to £907.40 a year. It seemed highly unlikely that there would be any further extension of the deadline beyond July, but in mid-June, the government announced a further deferral, all the way out to 5 April 2025.
Why it matters
The introduction of the new state pension in April 2016 was one of the most significant reforms to state benefits in decades. If you did not reach state pension age before 6 April 2016, there were two important adjustments to rules relating to pension entitlement and NICs:
- The period of NICs (including any credits) required to obtain a full pension was increased from 30 tax years to 35 tax years; and
- The corresponding minimum period for entitlement to any pension benefit moved from just one year to ten.
These changes left some people worse off, particularly those with contribution records of under ten years. To mitigate the effects, the government relaxed the rules permitting voluntary NICs to be made to fill in any missing years. These had normally only been payable for a maximum of the previous six tax years, but a temporary extension of the backdating period was introduced to allow voluntary contributions to cover the years from 2006/07 onwards, after which voluntary contributions could only have been made to cover periods from 2017/18 onwards.
If you have any gaps in your NICs record between April 2006 and April 2017 – even if you have now passed state pension age after 5 April 2016 – this is now (almost) certainly your last opportunity to fill them. However, it will not always be beneficial to make the top up, so you should seek advice before making any payments.
To discuss your financial planning, contact our Sheffield based Financial Advisers on 01142 664 432 or info@smh.group
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