Individuals who are planning their retirement have until 5 April 2025 to pay voluntary National Insurance Contributions (NIC) for gaps in their National Insurance (NI) records between April 2006 and April 2016.
Payments after 5 April 2025 will revert back to covering the previous six years.
UK State Pension
Individuals who reach UK State Pension age can receive up to £221.20 per week of the new State Pension benefits.
The new State Pension applies to:
- Men who are born on or after 6 April 1951
- Women born on or after 6 April 1953
Noting that individuals born before these dates will receive the basic State Pension of up to £169.50 per week.
State Pension benefits apply if an individual has contributed to their NI record for at least 10 qualifying years. In order to achieve the maximum new full State Pension, the individual will need to contribute for at least 35 qualifying years.
A qualifying year is a year where the individual was:
- working and paid NICs;
- receiving National Insurance credits for example, if you were unemployed, ill, or a parent or carer; or
- paying voluntary NIC
For individuals who are living abroad, such as in Australia, can make voluntary contributions to make catch up payments for gaps in their NI records.
Voluntary Contributions
Generally, voluntary NIC are paid towards the past six years. However, transitional arrangements can now be made as far back as April 2006, rather than the usual six years. This opportunity will end on 5 April 2025.
Individuals can make either voluntary Class 2 or 3 contributions to buy back missing periods.
Class 2 contributions are fixed weekly amounts and the current rate for the 2024/25 tax year is £3.45 per week. Payment made for periods from 6 April 2006, will be at the 2022/23 rate of £3.15 per week.
The current rate for Class 3 contributions in the 2024/25 tax year is £17.45 per week. Similar to Class 2, any gaps from 6 April 2006 will use the rate as per 2022/23, being £15.85.
Conditions for Class 2 or 3 National Insurance Contributions
In order to pay either Class 2 or Class 3 voluntary NIC whilst living outside of the UK, the individual must satisfy one of the below conditions:
- They must have spent at least 3 consecutive years in the UK; or
- They paid NIC for a period of at least 3 or more years prior to relocating overseas.
However, to specifically pay Class 2 NIC both of the following conditions must apply:
- They are gainfully employed outside of the UK; and
- They were ordinarily self-employed or employed immediately before relocating overseas.
Next Steps
If you wish to fill in gaps you should:
- Firstly, check your NI records for any gaps by requesting the State Pension forecast by either:
- Use the HMRC app or complete the online application form here.
- Complete the postal application (form BR19).
- Call the Future Pension Centre using the details here.
- Once you have received the forecast and made an informed decision you can complete form CF83 and make an application to Class 2 contributions – Application to pay voluntary National Insurance contributions abroad.
Prior to making contributions we recommend that you speak with your Financial Advisor.
Please contact your trusted advisor at GM Tax if you wish to discuss further.
