HMRC recently extended the deadline until 5 April 2025 for taxpayers to rectify any missing periods in their National Insurance record that could potentially boost their State Pension. This extension is close to a two-year addition.
Understanding State Pension Eligibility and National Insurance Records
State Pension eligibility in the UK hinges on an individual’s ‘qualifying years’ as recorded in their National Insurance history. In certain cases, there might be gaps in this record that could limit one’s entitlement to the State Pension.
Addressing Gaps in National Insurance Records
HMRC’s extension offers an opportunity for individuals to address any such gaps and improve their future State Pension qualifications. It is common for people to overlook short intervals of non-contribution to National Insurance, which can significantly impact their State Pension entitlement when they reach the requisite age.
HMRC’s choice to prolong the deadline is praiseworthy, as it allows a larger number of individuals to seize this chance. However, for those nearing the State Pension age, it’s probably best not to procrastinate.
What does a qualifying year entail?
Typically, a qualifying year is a year where:
- You’ve paid national insurance contributions through employment.
- You’ve gained national insurance credits as a result of being a parent, a jobseeker or disabled and claiming certain benefits.
- You’ve made a voluntary contribution.
To be eligible for the basic State Pension, a minimum of 10 qualifying years is required, and 35 qualifying years are needed for the full State Pension (currently approximately £185 weekly).
What constitutes a potential gap?
Some people might notice gaps in their record because they were employed but earned a low income or were unemployed and didn’t claim benefits. This could also be the case if they lived or worked outside the UK.
What’s the next step?
People can instantly review their State Pension projection on their government gateway account. Alternatively, those without a government gateway account can fill out a State Pension forecast application and mail it to HMRC.
These records will indicate any ‘gaps’ in qualifying years and the number of years needed to secure full entitlement. Voluntary National Insurance contributions can be made to supplement the ‘gaps’ in the record. Usually, you can make payments towards any gaps going back 6 years.
But, as an exceptional measure, HMRC has extended this 6-year limit to permit voluntary contributions for any ‘gaps’ in the contribution history dating back to 2006. This extension is in place until 5 April 2025. After this date, the regular 6-year limitation will be reinstated.
Reach Out for Help
Bear in mind that assistance is available, and tax systems are not foolproof. Reach out to us via our contact form, and one of our accountants will guide you through the necessary steps.
Q1. What counts as a qualifying year for the UK State Pension?
A1. A qualifying year is typically one where you’ve paid national insurance contributions through employment, received national insurance credits for being a parent, a jobseeker, or disabled and claiming certain benefits, or made voluntary contributions. You need at least 10 qualifying years for the basic State Pension, while the full State Pension (approximately £185 per week currently) requires 35 qualifying years.
Q2. What is considered a potential gap in my National Insurance record?
A2. Potential gaps can arise in your record due to periods of low-income employment, times of unemployment without benefit claims, or while living or working outside the UK. These gaps could impact your State Pension eligibility.
Q3. How can I identify gaps in my National Insurance record, and what actions can I take?
A3. You can check your State Pension forecast instantly on your government gateway account. If you don’t have an account, you can fill out a State Pension forecast application and mail it to HMRC. These records will highlight any ‘gaps’ in qualifying years and how many additional years are needed for full entitlement. Voluntary National Insurance contributions can address these ‘gaps’. Ordinarily, you can cover gaps going back 6 years. However, HMRC has extended this period to 5 April 2025, allowing for contributions covering any ‘gaps’ from 2006 onwards. After this date, the usual 6-year rule will resume.