If you haven’t paid enough NICs (or received sufficient credits) for a tax year, it can be possible to pay voluntary contributions to make up the shortfall.
Individuals who are employed and/or self-employed will normally pay NICs in line with their earnings. Entitlement to state benefits, such as the State Pension, are based on the number of qualifying years that an individual has accrued over their working life.
Where eligible, a man born after 5 April 1951, or a woman born after 5 April 1953 is currently able to pay voluntary NICs for tax years as far back as April 2006.
This was due to change from 6 April 2023 so that voluntary contributions could only be backdated by six tax years, but in the spring, the government announced that the deadline would be extended to 31 July 2023. Due to HM Revenue & Customs (HMRC) and the Department for Work and Pensions (DWP) being overwhelmed by enquiries, the deadline has now been extended again to 5 April 2025.
Victoria Atkins, Financial Secretary to the Treasury said, “People who have worked hard all their lives deserve to receive their State Pension entitlement, and filling gaps in National Insurance records can make a real difference. With the deadline extended, there is no immediate rush for people to complete gaps in their record and they will have more time to spread the cost.”
What does this new extension mean?
You now have until 5 April 2025 to pay voluntary NICs for the original period (from April 2006 to April 2016), as well as for the 2016/17 and the 2017/18 tax years. HMRC has confirmed that 2022/23 NIC rates will apply for the voluntary contributions being made retrospectively for the 2006/07 to 2017/18 tax years.
This gives more time to identify any gaps in your NICs record, so that you can decide whether to make voluntary contributions. You can check your State Pension forecast here.
From 6 April 2025 onwards, it will only be possible to backdate voluntary contributions for six tax years.
Taking sensible tax steps
It’s important to ensure you are in the best place possible when it comes to tax planning and your pension. Sensible tax planning can help to reduce the amount of tax you pay and safeguard your wealth for the future. We can help – please get in touch.
Information is based on our current understanding of taxation legislation and regulations. Any levels and bases of, and reliefs from taxation, are subject to change. The Financial Conduct Authority does not regulate tax planning.