Deadline Extended for Payment of Class 3 National Insurance Contributions (NIC)

The concession allowing for an extension of the National Insurance Contributions (NIC) payment deadline has been further extended, giving taxpayers an additional 22 months to boost the amount of state pension they will be entitled to claim. Many individuals are... Read more

The concession allowing for an extension of the National Insurance Contributions (NIC) payment deadline has been further extended, giving taxpayers an additional 22 months to boost the amount of state pension they will be entitled to claim.

Many individuals are unaware that they may have gaps in their NIC records, stemming from years during which they did not make full 52-week contributions. This gap only becomes apparent when they reach the State Pension Age (SPA), at which point they may be shocked to discover that they do not qualify for the full state pension.

For individuals reaching SPA on or after April 6, 2016, a minimum of 35 full years of NIC contributions is typically required to receive the maximum state retirement pension, with at least ten full NIC years necessary to qualify for any state retirement pension. However, for taxpayers who attained SPA before April 6, 2016, eligibility for the old state pension is determined by distinct NIC periods for men and women. Women born before 1950 require a minimum of ten years, while men born before 1945 need a minimum of eleven years of contributions.

Taxpayers can assess their entire work history and estimate their state retirement pension via their online personal tax account. If access to the personal tax account is unavailable, alternative methods for reviewing NIC records, including postal options, are available.

Shortcomings in the NIC record may also result in the denial of other contribution-related state benefits, such as employment and support allowance, bereavement support payment, or maternity allowance.

Initially, the deadline for bridging NIC gaps through voluntary NIC payments was April 5, 2023. However, eager taxpayers attempting to make one-off payments experienced difficulties reaching the HMRC helpline. Consequently, the deadline was extended to July 31, 2023. In a formal statement on June 12, 2023, the Government announced a further extension, pushing the deadline to April 5, 2025.

On April 27, 2023, the government further declared that parents who had not claimed child benefit, resulting in reduced state pension entitlement, could retroactively receive National Insurance credits.

HMRC has confirmed that taxpayers can continue to make voluntary Class 3 NIC payments at the 2022-23 rate of £15.85 per week for all payments until April 5, 2025. For certain taxpayers, this could amount to a substantial sum, potentially making up NIC gaps spanning up to twelve years.

Given that this effectively constitutes an investment decision, taxpayers must weigh the decision to make additional NIC payments against the expected benefits in the form of increased state pension entitlement over their projected lifespan.

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