Buying state pension top ups – act now
5 April is a crucial deadline to fill gaps in missing NI contributions and boost your state pension.
Topping up your pension contributions can be very lucrative; indeed, this could add thousands to your state pension. HMRC allows people to buy missing years as far back as 2006, but soon you will only be able to backdate these to the previous six tax years.
Individuals have until 5 April 2025 to maximize their state pension by making voluntary National Insurance contributions to cover any gaps in their NI contributions record from 6 April 2006 to 5 April 2018. So, it’s crucial to act in good time.
HMRC launched an online tool earlier this year to make the process quicker and easier for some, but they have now confirmed that many won’t get access to it before the 5 April 2025 deadline.
How many full National Insurance qualifying years you have is important, as it goes some way to determining how much state pension you will receive when you retire. You usually need at least 35 full NI years to get the maximum new state pension (currently £221.20 a week). You can earn qualifying years in a range of ways, including through employment or by claiming certain benefits.
But you may find that you have gaps or part years on your NI contribution records for several reasons. For example, if you were employed on low earnings, unemployed but not claiming benefits, on maternity leave or living/working abroad.
It can be extremely lucrative to plug these gaps. For example, many people can spend £824 or less and get £5,500 back.
How much do voluntary contributions cost?
The cost for voluntary contributions depends on when the gaps in your record occurred. The standard cost of buying ‘Class 3’ National Insurance contributions is £17.45 for a week of missing contributions in the 2023-24 and 2024-25 tax years. It would cost you £907.40 for an entire year.
For those able to fill gaps between 2006 and 2017, men born after 5 April 1951 and women born after 5 April 1953, the cost for a week is £15.85.
How to pay
If you choose to make a voluntary contribution, you will first need your 18-digit reference number. If you do not have this you can request it via HMRC’s telephone helpline on 0300 200 3500 which is open Monday to Friday, 8am to 6pm.
The lines can be extremely busy and you may not always be able to get through to an advisor. If you can’t get through, you can also pay by cheque with your National Insurance number as a reference.
Please note, HMRC says that you can’t and won’t be able to use the tool to plug gaps in your NI record if:
• You’re already over State Pension age.
• You’ve been self-employed for any of the years you’re trying to pay for.
• You’ve lived abroad for any of the years you’re trying to pay for.
• You’re a woman who holds a valid Married Women’s Reduced Rate Election certificate.
• You’re eligible to apply for Home Responsibilities Protection.
• Your NI record is currently being updated.
IN SUMMARY
Ordinarily, individuals can only pay voluntary National Insurance contributions for the previous 6 tax years. The deadline is 5 April each year.
However, for those who would like to top up contributions further back than the usual 6 tax years, now is the time and a very good opportunity to make voluntary contributions (until the deadline of 5 April 2025)
To check your state pension forecast, you need to have a government gateway account or you can create one. Please do contact us if you have difficulty setting this up.
By Partner Andrew Wayness
