The government have just extended the deadline for payment for buying back contribution years for state pension from 5 April to 31 July 2023 – taxpayers have extra time to make voluntary national insurance (NI) contributions going back to April 2006. The government has announced that contributions made in this window will be at the 2022/23 voluntary NI rates.
What is my state pension based on?
State pension entitlement is based largely upon payment of national insurance contributions and the amount of pension is based upon the number of qualifying years of such contributions. As some people may have missed out years, the government allowed payments for missing years to made at any time up to 5 April 2023 in respect of tax years as far back as 2006-07.
Because of difficulties experienced in making contact with government offices, this deadline has now been extended until 31 July 2023, but applicants are advised not to leave it until the last minute.
Any man born after 5 April 1951 and any woman born after 5 April 1953 will be entitled to the new state pension if they have at least 10 qualifying years, and they will get the full state pension if they have at least 35 qualifying years.
It is important to note that you can’t elect to stop paying contributions after 35 years. Any that you pay after that will simply go into the general pot! Your contributions only stop when you actually reach pension age.
You can check your state pension age by going online to gov.uk/state-pension-age.
State Pension Forecast Calculator
If you are not at state pension age, check your NI contribution record by logging onto the State Pension forecast calculator, which you can access through your Government Gateway.
I don’t have a Government Gateway
It is not a problem if you do not have a Government Gateway user ID in place? To set up a Government Gateway click on the link above and choose ‘start now’. Enter your name, email address and a password. You must then answer security questions to verify your identity, (you will need your National Insurance number, passport, pay slips or P60 to do this).
If you think you may benefit by paying for missing years, the recommended procedure is as follows:
- Go online at gov.uk/check-state-pension to check your state pension forecast
- If this shows any missing years, telephone the Future Pension Centre on 0800-731-0175 to check if it would be advantageous to make voluntary contributions
- If confirmed, you will be referred to HMRC to get an 18-digit code which is necessary to enable you to make the necessary payment
- The cost for a missing year is £163.80 if you were self-employed for that year or £824.20 otherwise.
As mentioned above, people have experienced difficulties in contacting the authorities, but the only advice is to keep on trying!
It is worth noting that you may have a qualifying year even if you did not pay any contributions. This will be the case if, for instance, you were employed and earned at least the amount of the “Lower Earnings Limit” (currently £123 per week) or you were registered to receive child benefit (even if you had to pay all of this back because your own or your partner’s income exceeded £60,000 for that year).
The current new state pension is £141.85 per week. If your spouse dies and your own pension is less than that amount, it may be possible to top it up to that figure if your spouse had a sufficient contributions record.
How does State pension work for a transgender person?
Your State Pension might be affected if you’re a transgender person and you:
- were born between 24 December 1919 and 3 April 1945
- have claimed State Pension before 4 April 2005
- can provide evidence that your gender reassignment surgery took place before 4 April 2005
Find out more and contact the Gender Recognition team.
You do not need to do anything if you legally changed your gender and started claiming State Pension on or after 4 April 2005 – you’ll already be claiming based on your legal gender.
HB Accountants will not advise you on your pension – you will need to speak with your pensions professional. If you would like to talk to us about looking after your personal or business tax, call us on 01992 444466. We’re experts ready to support you and your business, no matter your company size or sector.
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The information contained above is for general guidance purposes only. Whilst every effort has been made to ensure the contents are accurate, please note that each individual has different circumstances and it is essential that you seek appropriate professional advice before you act on any of the information contained herein. HB Accountants can accept no liability for any errors or omission or for any person acting on or refraining from acting on the information provided in the above
