Voluntary National Insurance Contributions
This blog provides an overview of why you would want to make voluntary National Insurance contributions and is based on information obtained from the HMRC web site https://www.gov.uk/voluntary-national-insurance-contributions.
You may have gaps in your National Insurance (NI) payments records if you have not always paid NI. This could be because you were:-
- Employed but had low earnings
- Unemployed and were not claiming benefits
- Self employed but did not pay contributions due to small profits
- Living abroad
Gaps mean that you will not have enough years (sometimes called qualifying years) of National Insurance contributions to receive the full state pension. You may be able to pay voluntary contributions to fill any gaps depending on whether you are eligible to do so.
Check your NI records for gaps
You can request your National Insurance records from HMRC to check to see whether you have any gaps in your contributions. Your record will tell you if you can pay voluntary contributions to fill gaps and how much it will cost you. You may be eligible for National Insurance credits if you claim benefits because you cannot work, are unemployed or a full time carer.
Paying Voluntary National Insurance Contributions
You may want to pay voluntary contributions because you:-
- Are close to state pension age and do not have enough qualifying years to receive the full state pension
- Know that you will not be able to get the qualifying years that you need to receive the full state pension during your working life
- Are self employed and do not have to pay class 2 NI contributions because you have low profits or live outside the UK
Self Employed People with specific jobs
Some people do not pay class 2 NI contributions through self assessment but may want to pay voluntary contributions. These are:-
- Examiners, moderators, invigilators and people who set exam questions
- People who run businesses involving land or property
- Ministers of religion who do not receive a salary or stipend
- People who make investments for themselves or others – but not as a business and without receiving a fee or commission
You must be eligible to pay voluntary National Insurance contributions for the time that the contributions cover. You can usually only pay for gaps in your National Insurance record from the past six years. However, you can sometimes pay for gaps from more than six years ago depending on your age.
You cannot pay voluntary contributions if you are:-
- eligible for National Insurance credits
- a married woman or widow paying reduced rates
National Insurance Contribution Rates
The National Insurance contribution rates for the 2017/18 tax year are:-
- Class 2: £2.85 per week
- Class 3: £14.25 per week
When you pay the different rates
You usually pay the current rate when you are making a voluntary contribution. However, if you are paying class 2 NI contributions for the previous tax year or class 3 NI contributions for the previous two tax years, you pay the original rate for those years.
You can usually pay voluntary contributions for the last six years. The deadline is 5th April each year. For example, you have until 5th April 2018 to make up any gaps for the tax year 6th April 2011 to 5th April 2012. This is because 5th April 2018 is six years after the end of the 2011/12 tax year.
You have six years after your reach state pension age to increase your state pension if you are a:-
- Man born between 6th April 1945 and 5th April 1950
- Woman born between 6th April 1950 and 5th April 1952
For further information please contact Stallion Accountancy Services.