Did you know there is a tax efficient way to make contributions into employee’s pension…
People planning to claim the UK state pension have been advised to check their National Insurance (NI) record to identify any shortfalls in their payment history.
NI contributions, or lack of them, can affect a person’s entitlement to the state pension in later life.
A temporary window which allows people to voluntarily top up NI contributions for tax years dating as far back as 2006, will close on 6 April.
Filling payment gaps
To ensure people were able to claim their full pension, the Government had put a temporary extension in place enabling people to fill any gaps in their NIC history.
However, from 6 April 2023, the timeframe for making voluntary contributions will revert to the normal six years.
This means that in the 2023/24 tax year, it will be possible to make contributions going back to the 2017/18 tax year only.
To qualify for the new maximum state pension, you must have at least 35 years of qualifying NI contributions.
You may only receive a part payment if you don’t qualify for a full state pension, and you need a minimum of 10 qualifying years to receive a partial state pension.
Individuals should therefore take the opportunity to check their NI record to identify any shortfalls in their NI history.
HMRC is advising taxpayers to take the following action before 5 April 2023:
- Check your NI record
- Identify any discrepancies between NI contributions paid and those showing on HMRC’s system
- Identify any NI credits that are missing from periods in which they should have been received (eg, on receipt of universal credit or child benefit)
- Identify any shortfalls in contributions
- Contact HMRC if you think there are any errors
- Decide whether to make voluntary NI contributions