Paul Sanchez
Filling in gaps in your National Insurance record can be done by paying voluntary contributions. This can be done by anyone with NI gaps in some of their tax years, which, if filled, could increase their eventual state pension. The cost of doing this varies depending on the number of years and weeks that need to be filled. For example, the cost of filling in a gap for the 2022-23 tax year is £824.20, while the cost for 2023-24 is £907.40. Typically, you can only pay voluntary national insurance contributions going back six years, however, this has been extended to the 2006-07 tax year until 5 April 2025. For those aged between 40 and 73, buying extra national insurance years could boost your state pension significantly.
| Characteristics | Values |
|---|---|
| Who should consider filling gaps in National Insurance | Those aged between 40 and 73 |
| Who should not consider filling gaps in National Insurance | Those younger than 40, as they may still fill the gaps naturally |
| When to fill gaps in National Insurance | Before the deadline of 5 April of the relevant year |
| How to fill gaps in National Insurance | By paying voluntary contributions, typically for up to the past six years |
| Cost of filling gaps in National Insurance | Varies; can be as little as £15 for a partial year or up to £800-£900 for a full year |
| Benefits of filling gaps in National Insurance | Boosting state pension, which could be worth thousands of pounds |
| Risks of filling gaps in National Insurance | May be unnecessary if you already have enough qualifying years for a full state pension |
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What You'll Learn
Filling gaps in national insurance can boost your state pension
Gaps in your National Insurance record can occur when you do not pay National Insurance or do not receive National Insurance credits. Typically, you need at least 10 qualifying years of National Insurance contributions to qualify for a State Pension. If you have fewer than 10 qualifying years, you may want to consider filling in the gaps in your National Insurance record.
You may be able to pay voluntary contributions to fill in these gaps and increase your State Pension. The cost of doing so varies depending on the number of years you need to fill and the earnings threshold for a full qualifying year. For instance, the cost of filling in a gap for the 2022-23 tax year is £824.20, while the cost for 2023-24 is £907.40. It's important to note that paying voluntary contributions may not always increase your State Pension.
If you are below State Pension age, you can check your individual state pension forecast online to see if filling in gaps will be beneficial for you. You can also contact HM Revenue and Customs (HMRC) if you believe there is an error in your National Insurance record.
For those aged 40 to 73, buying extra National Insurance years could significantly boost your state pension. However, it is essential to carefully consider your options, as you may still naturally fill the gaps over time. Seeking financial advice can help you understand the financial implications and make an informed decision.
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You may be eligible for National Insurance credits
National Insurance credits are different from National Insurance contributions. You may be eligible for National Insurance credits if you are not paying National Insurance, for instance, when you are claiming benefits due to unemployment or illness. These credits can help fill gaps in your National Insurance record, ensuring you qualify for benefits such as the State Pension. There are two types of credits: Class 1 and Class 3. Class 1 credits count towards your State Pension and may help you qualify for other benefits like the New Style Jobseeker's Allowance. Class 3 credits only count towards your State Pension.
You can check for any gaps in your NI record, which will be listed in chronological order, and then check your eligibility for credits. You'll either get them automatically or will need to apply for them. To apply, write to HMRC, including your National Insurance number, the date, and the reason for your eligibility. You can get Class 3 credits if you are responsible for a child or children. For instance, if you claim child benefit for caring for a child under 12, you will automatically receive Class 3 credits. If you are the partner of a child benefit recipient and live with them, you can transfer the entitlement of credits to yourself using form CF411A. If you are 16 or over and an approved foster carer or kinship carer of a child under 12, you can apply for credits using the same form. Grandparents or other family members of a child under 12 who is cared for due to their parents' employment may be able to claim specified adult childcare credits.
You can also qualify for National Insurance credits if you are caring for someone other than a child. You may be eligible for Specified Adult Childcare Class 3 credits if you are an eligible family member over 16 but under State Pension age, and have cared for a child under 12 since 6 April 2011, with the child's guardian agreeing to transfer the credits. If you receive Universal Credit, you will automatically get Class 3 credits. If you have attended court and are not self-employed, you can write to HMRC to apply for Class 1 credits. If your conviction was quashed by an appeals court, you can also apply for Class 1 credits.
Additionally, if you are between 45 and 73, buying extra National Insurance years can significantly boost your state pension.
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Voluntary contributions can be made to fill gaps
However, it is important to note that the younger someone is, the more likely it is that they will naturally build up their NI contribution record over time. Therefore, buying extra years now may be a waste of money. For most people under 40, it probably won't make sense to pay for full NI years, but it might be worth checking if you can upgrade partial years at a low cost.
If you are aged between 40 and 73, buying extra national insurance years could significantly boost your state pension. You can check your individual state pension forecast online to see how much state pension you are on track to receive, how much more you could get, and the voluntary NI contributions you would need to make to achieve this.
To fill in gaps in your NI record, you must be eligible to pay voluntary National Insurance contributions for the time that the contributions cover. Usually, you can only pay voluntary contributions going back six years, but this has been extended to the 2006-07 tax year until 5 April 2025. After this date, you will only be able to pay voluntary contributions for the past six years. The cost of filling in gaps varies depending on the tax year. For example, the cost of filling a gap for the 2022-23 tax year is £824.20, while the cost for 2023-24 is £907.40.
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Deadlines for paying voluntary contributions
Deadlines are an important consideration when paying voluntary National Insurance contributions to fill gaps in your record. Here are the key points to keep in mind:
Eligibility:
To be eligible to pay voluntary contributions, you must meet certain criteria. This includes factors such as your age, whether you are living or working abroad, and the number of qualifying years you have towards your State Pension. It is important to check your eligibility before considering deadlines.
Standard Deadline:
The standard deadline for paying voluntary National Insurance contributions to fill gaps is 5 April each year. This deadline allows you to pay for gaps from the past six tax years. For example, if you want to fill gaps for the tax year 2024 to 2025, you have until 5 April 2031 to make the necessary contributions. This deadline ensures that you can take corrective action for relatively recent gaps in your National Insurance record.
Extensions:
In some cases, the deadline for paying voluntary contributions may be extended. This typically occurs when there is a high demand for such payments, and an extension is deemed necessary to ensure fair treatment and equal opportunity for all individuals wishing to take advantage of this option. For example, in 2023, the deadline was extended from 5 April 2023 to 31 July 2023, providing an additional window of time for individuals to make their voluntary National Insurance contributions for certain years.
Special Circumstances:
There may be special circumstances where you can pay for gaps from more than six years ago. This typically depends on your age and other specific criteria. It is important to consult official government sources or seek advice from HM Revenue and Customs (HMRC) to understand if you meet the criteria for such circumstances.
State Pension Considerations:
When considering deadlines, it is important to remember that voluntary contributions do not always increase your State Pension. If you are below State Pension age, it is recommended to check your State Pension forecast or contact the Future Pension Centre to understand if paying voluntary contributions will provide you with any benefit. This additional step can help you make an informed decision about meeting deadlines for voluntary contributions.
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Buying extra years may be a waste of money
If you are younger than 40, it is generally not worth paying for full National Insurance (NI) years. This is because you have plenty of time to earn enough qualifying years before reaching State Pension age. For example, you might naturally fill the gaps through employment or be able to upgrade partial years at a low cost.
The younger you are, the more likely it is that you will build up your NI contribution record over time. Therefore, buying extra years now could be a waste of money. You will get a pro-rata amount of state pension if you do not have the full 35 years of NI contributions or credits.
Before deciding to pay voluntary contributions, it is essential to check your NI record to identify any gap years. Each gap year may only require you to buy one or two weeks' worth of contributions to become a full qualifying year.
If you are below State Pension age, you should contact the Future Pension Centre to determine if voluntary contributions will benefit you. You can also seek financial advice to help you decide whether buying extra NI years is a worthwhile investment.
Overall, while buying extra NI years can boost your state pension, it may not be necessary or cost-effective for younger individuals who have time to build their NI contribution record through regular employment.
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Frequently asked questions
People aged 40 to 73 who are worried about not having enough qualifying years before they reach State Pension age may consider filling gaps in National Insurance. For those younger than 40, it is likely not worth it as they will probably be able to earn enough qualifying years naturally.
You can check your National Insurance record to see if there are any gap years. For each gap year, you will be able to see the size of your shortfall and how much it will cost to fill.
You may be able to pay voluntary contributions to fill gaps in your National Insurance record. You must be eligible to pay voluntary contributions for the time that the contributions cover. You can usually only pay voluntary contributions for the past six years, and the deadline is 5 April each year.
