If you have an incomplete National Insurance
Contributions (NICs) record, this can reduce the amount of basic
state pension (BSP) you receive at retirement. However, in some
circumstances, you can make good any gaps by paying Voluntary NICs,
thereby helping you qualify for, or improve, your entitlement.
Voluntary NICs (known as Class 3 NICs) can be paid for any tax year
in which you were over 16 and not liable to pay Class 1 NICs
and/or Class 2
NICs. In some circumstances, you can also pay voluntary NICs
whilst living abroad.
You cannot, however, pay voluntary NICs if you are a woman who
has elected to pay the reduced rate NICs for the whole of a tax
year.
The payment of voluntary NICs helps towards:
- Basic State Pension
- Widowed parent's allowance
- Bereavement payment
- Bereavement allowance
Normal rules for paying voluntary NI contributions
Ordinarily, you can pay voluntary NICs for any one of the
previous six tax years. However, there is currently an
allowance for some people to pay voluntary NICs for any tax year as
far back as 1996/97.
1996/97 to 2001/2002
This is only available if you reached your State
Pension Age (SPA) between 6 April 1998 and 24 October
2004. The deadline for making payment is 5 April 2010.
It was previously available if you reached your SPA after 24
October 2004 but the deadline for this expired on 6 April 2009.
2002/03 onwards
For the tax years 2002/03 onwards, the normal time limits for
the payment of voluntary NICs apply. This means you must pay within
six years of the end of the tax year in which voluntary NICs were
due. The payment dates are:
- 2002/03 tax year is 5 April 2009 (it is now too late to pay for
this year)
- 2003/04 tax year is 5 April 2010
- 2004/05 tax year is 5 April 2011
- 2005/06 tax year is 5 April 2012
- 2006/07 tax year is 5 April 2013
- 2007/08 tax year is 5 April 2014
- 2008/09 tax year is 5 April 2015
- 2009/10 tax year is 5 April 2016
Click here for
a schedule showing the deadline and costs of paying voluntary NI
contributions.
Additional rules in force since 6 April 2009
Since 6 April 2009, it has been possible to pay up to a
further six years of voluntary NICs, over and above those detailed
in the above section, to help boost the BSP entitlement. The
criteria for paying these further contributions are:
- Your State Pension Age (SPA) must be between 6 April 2008 and 5
April 2015;
- You can only pay for missing years going back to 6 April 1975;
and
- You must already have at least 20 qualifying years (including Home
Responsibilities Protection) on your NI record
Click here for
a schedule showing the deadline and costs of paying voluntary NI
contributions.
Cost of paying voluntary NI Contributions
The cost depends on the tax year being credited and the tax year
of actual payment.
All voluntary NICs paid in respect of the additional rules in
force from 6 April 2009 (see above) will cost the higher rate.
Click here for
a schedule showing the deadline and costs of paying voluntary NI
contributions.
Qualifying years required
Currently, the full rate of BSP is payable if you have
qualifying years of about 90% of the years in your working life.
This is currently 39 years for a woman and 44 years for a man.
However, those reaching SPA on or after 6 April 2010 will only
require 30 qualifying years to claim the full BSP. Therefore,
if you will reach your SPA on or after that date and already have
or are expecting to have 30 qualifying years, it may not be in your
best interests to pay voluntary NICs.
New! Voluntary National
Insurance Contribution Planner
This planner will help you make a decision about whether or not
to boost your Basic State Pension (BSP) by paying Class 3 National
Insurance Contributions (NICs).
Click here to use the Voluntary
National Insurance Contribution Planner
Q & A's
To decide whether paying voluntary NI contributions will be of
benefit you should first obtain a state pension forecast. This will
tell you how much pension you can expect and whether the payment of
voluntary NI contributions will improve your entitlement.
Click
here for information about forecasts and how to get one.
If you reached your SPA between 6 April 1998 and 24
October 2004, you should call the Pension Service on 0845 600
6669.
NI contributions are collected by HM Revenue & Customs.
If you have already established that you want to pay voluntary
NI contributions, HMRC will be able to send you a quote, advising
you what you will need to pay, along with instructions on how to
make a payment.
HMRC's NI Contribution Office can be contacted on 0845 9155
996.
Voluntary NI contributions are calculated on a weekly flat rate.
For the tax year 2009/10 the weekly rate is £12.05.
There is a time limit of six years starting from the end of the
tax year in which they were due. However, for the years 1996/97 to
2001/02 the time limit was extended to 5 April 2010 if you
reached State Pension Age between 6 April 1998 and 24 October
2004.
But it may also be possible, subject to certain criteria, to buy up
a further six years as far back as 1975. You need to have 20
qualifying years already, and you must reach State Pension Age
(SPA) must be between 6 April 2008 and 5 April 2015.
Normally voluntary NI contributions cannot be paid by
instalments. However, there are special arrangements for the tax
year from 1996-1997 to 2001-2002, whereby you may be able to pay by
instalments.
To discuss, either ring 0845 915 5996, or write to:
HM Revenue & Customs
National Insurance Contributions Office
Benton Park View
Newcastle upon Tyne
NE98 1NG
Not normally, the circumstances are very limited. Usually, only
if you have not paid enough in a particular tax year for that year
to count towards entitlement.
Unfortunately not. The new rules giving a full basic state
pension based on only 30 qualifying years is only effective for
those reaching SPA on or after 6 April 2010. As you will reach
yours before then, you will be covered by the existing rules. You
will still need 39 (for a female) or 44 (for a male) qualifying
years for the full amount.
