Taxpayers have been awarded extra time to submit any outstanding National Insurance contributions, which could raise their pension pots by tens of thousands of pounds.
After widespread concern was voiced over the original cut-off date of 5 April (Money Saving Expert’s Martin Lewis among them), an extension of the deadline was announced for voluntary contributions earlier this year until 31 July. However, with just days to go, it has now been extended even further - until April 2025.
Any taxpayers who submit payments for gaps in their National Insurance contributions between April 2006 - April 2017 will benefit from the lower 2022-2023 tax rate if paid before this extended deadline.
Anyone in part-time or full-time employment in the UK must pay National Insurance (NI) contributions, which are typically deducted through your monthly payslip.
When you go through a period of unemployment or earn less income than usual (such as during a period of reduced hours, for example), this means that your National Insurance payments will likely be less or missed entirely during these times. These payments ultimately increase the amount a taxpayer receives as their state pension when they retire, which means that someone with missing contributions will receive less financial support when they choose to retire than someone with similar circumstances who has maintained regular monthly payments.
It’s important that taxpayers are aware of what provisions they will have access to during retirement so that they can accurately plan to enjoy their retirement comfortably and within their means.
The state pension you receive once you retire is based on your National Insurance record, so any missed contributions will negatively impact the amount you have available and could significantly reduce your spending power if not corrected.
While it may seem far away, paying any outstanding contributions to your National Insurance record now could drastically improve your quality of life during retirement, so we strongly urge anyone who is able to pay any missing contributions while they still can.
It can be tricky keeping track of all your finances at any time, never mind during a cost-of-living crisis. Eligible taxpayers who wish to check their National Insurance record can click here to explore their full schedule of payments.
This facility will clearly outline how much was made in NI payments each year and flag outstanding payments in full so that you can quickly and easily rectify them in time for the extended deadline.
You can view this on HMRC’s website, which will detail how much you’re currently entitled to based on payments to date, how much you could receive if you continue paying NI until your retirement date, and how much you could increase this by (if you’re eligible).
You’ll need to log in to your Government Gateway account to access this information, so ensure that you have your 12-character Government Gateway ID and password to hand, as well as the phone number used as your primary two-factor authentication device.
The new State Pension is £203.85 per week, or £10,600.20 annually. If you have outstanding payments, you could be below the threshold needed to receive this maximum amount.
While you may be able to pay outstanding contributions in future fiscal years, if the rate of National Insurance increases, so too with these outstanding payments. So, if you are able to pay any missing contributions before April 2025, you’ll lock in the lower rate, boosting your spending power both now and in retirement.
If you have questions or concerns about your pension forecast or any outstanding payments, get in touch with our expert team today.