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Mar 30, 2023

Wheelers Words – National Insurance and the interaction with the state pension

Have you checked your national insurance (NI) contribution record? Your contribution levels affect the level of state pension paid when you retire, they can also affect other benefits, such as employment and support allowance. It is possible to pay voluntary contributions to fill gaps in your NI record, however the number of gaps that can be filled is changing.

Currently, voluntary contributions can be made to fill gaps back to 6 April 2006. However, from 31 July 2023 you can only go back and pay voluntary NI contributions for a period of six tax years.

In general, to qualify for the maximum ‘new state pension’ (received by those retiring on or after 6 April 2016) a person must have thirty-five qualifying years of NI contributions. To receive a proportion of the ‘new state pension’ a person must have contributed for at least ten years. However, some individuals may need more than thirty-five qualifying years, depending on their NI record start date as the rules have changed.

You can get qualifying years for NI purposes in the following ways:

  • paying NI contributions (either by employment or self employment)
  • NI credit is received
  • paying voluntary NI contributions (however there are time limits for paying these)

Class 1 employee NI contributions are paid by employed individuals once certain thresholds are exceeded. The amounts paid can be checked to your HMRC NI record by using your P60.

Self-employed individuals should have a qualifying year for NI purposes where Class 2 NI is paid, this is due once the small profits threshold has been exceeded. However, a self employed individual can elect to pay voluntary class 2 NI contributions when their earnings are below the small profits threshold by ticking a box on their self assessment tax return.

A NI credit can apply if an individual is:

  • looking for work
  • ill, disabled or on sick pay
  • on maternity, paternity or adoption pay
  • a parent or guardian
  • a carer
  • a grandparent or other family member caring for a child
  • on Working Tax Credit
  • on Universal Credit
  • on a training course
  • on jury service
  • a partner of a person in armed forces
  • wrongly imprisoned

Detailed rules apply for each NI credit, these can be found at the link below, along with how the credit is applied to your record:

Please note, you cannot usually get NI credits if you are:

  • a married woman paying reduced rate National Insurance
  • self-employed and need to pay Class 2 National Insurance

Checking your NI record

The easiest way to check your NI record is to log on to your personal tax account, if you do not have one you can create one (you may need some personal details to confirm your identity during this process):     

You should then see a national insurance box, where a section that says ‘gaps in your record’ can be opened. This will show you details of your national insurance contributions year by year. It will explain if a full year is obtained or not and the details HMRC hold to support this.

We suggest you check your NI record. It is possible there could be an error. Changes in the NI payment system for the self employed years ago may have resulted in HMRC recording incorrect NI contributions. An NI credit may have also been missed or not applied for.

If there are discrepancies on your record you should contact HMRC to correct these. It is recommended you do this as soon as possible, especially whilst you hold paperwork to support the correct position as they may need to see this. Contact details can be found on the following link:

When considering if voluntary NI contributions should be made it is worth predicting what contributions are likely to be made prior to state retirement age and if any further qualifying years will be obtained.

Unfortunately as agent, we are unable to view NI records to consider these for you. If you have any queries or require more information, please do not hesitate to contact us.