National Insurance

Many people are unaware that gaps in their National Insurance (NI) record can affect their entitlement to the State Pension and certain state benefits. In some cases, it may be worthwhile to consider making voluntary NI contributions to fill these gaps.

Gaps can arise for a number of reasons, including periods of low earnings, unemployment without claiming benefits, self-employment with small profits, or time spent living and working abroad. If sufficient qualifying years are not built up, this could reduce the amount of State Pension ultimately received.

Voluntary contributions can help increase State Pension entitlement, particularly for those approaching retirement age who do not have enough qualifying years, or those who expect to fall short of the years needed for a full State Pension. They may also be worth considering for individuals living overseas who wish to maintain their entitlement to UK pension benefits.

However, paying voluntary contributions does not always provide a benefit. For example, some individuals who were contracted out of the State Pension system may see little or no increase in their pension entitlement. Before making any payment, it is important to review your National Insurance record and obtain a State Pension forecast.

Taxpayers should also check whether they are entitled to National Insurance credits, as these may fill gaps without the need to make voluntary contributions. Taking advice before paying can help ensure that any contributions serve a useful purpose.

Most self-employed people are required to pay Class 4 National Insurance contributions (NICs).  Class 4 NICs are payable if their profits are £12,570 or more a year.

Class 4 NIC rates are currently 6% for chargeable profits between £12,570 and £50,270 plus 2% on any profits over £50,270.

A number of categories of people are exempt from paying Class 4 NICs, these include:

• People under the age of 16 at the beginning of the year of assessment.
• People over State pension age at the beginning of the year of assessment. A person who attains State pension age during the course of the year of assessment remains liable for Class 4 NICs for the whole of that tax year.
• People receiving profits in their capacity as a trustee, executor or administrator of a person liable to tax under ITTOIA2005/S8.

The mandatory payment of Class 2 National Insurance Contributions (NICs) for the self-employed was abolished effective from 6 April 2024. It can be advantageous for some self-employed people who do not pay NICs through self-assessment to make voluntarily Class 2 NICs. This can help them to access certain contributory benefits including the State Pension. It is important to confirm that this would be beneficial before making any voluntary payment. The current 2026-27 weekly rate for making voluntary Class 2 NICs is £3.65.

Most self-employed individuals pay Class 2 and Class 4 NICs via the self-assessment system. Certain self-employed individuals, such as examiners, moderators, invigilators, and ministers of religion, without a salary, do not pay National Insurance through self-assessment but it may be beneficial for them to make voluntary contributions.

National Insurance contributions that relate to employee benefits are known as Class 1A National Insurance contributions. Employers must pay these National Insurance contributions on most work-related benefits provided to employees, such as a company mobile phone or other non-cash perks.

Class 1A National Insurance also applies to certain termination payments. For example, employers may need to pay Class 1A National Insurance contributions on payments exceeding £30,000 made when an employee’s employment ends, such as redundancy or other termination awards. However, this only applies where Class 1 National Insurance has not already been charged on those amounts.

Timing of payment depends on the nature of the liability. For benefits in kind, Class 1A National Insurance is generally payable annually, with payment due by 22 July following the end of the tax year (or 19 July if paying by post). The payment of Class 1A National Insurance on termination awards is dealt with through PAYE at the time the payment is made.

Late payment can result in interest and penalties, so ensuring timely reporting and payment is important.

National Insurance credits can help qualifying applicants to fill contribution gaps in their National Insurance record. This can help taxpayers increase their number of qualifying National Insurance years, which may increase the number of benefits they are entitled to, such as the State Pension.

This could happen if someone was:

• employed but had low earnings
• unemployed and were not claiming benefits
• getting National Insurance credits for less than a full tax year
• self-employed but did not pay contributions because of small profits
• living or working outside the UK.

National Insurance credits are available in certain situations where people are not working and therefore, not paying National Insurance contributions. For example, credits may be available to those looking for work, who are ill, disabled or on sick pay, on maternity or paternity leave, caring for someone or on jury service.

Depending on the circumstances, National Insurance credits may be applied automatically or an application for credits may be required. There are two types of National Insurance credits available, either Class 1 or Class 3. Class 3 credits count towards the State Pension and certain bereavement benefits whilst Class 1 covers these as well as other benefits such as Jobseeker’s Allowance.

Taxpayers may also be able to pay voluntary Class 2 or Class 3 National Insurance contributions to protect their entitlement to the State Pension (and in some cases other benefits) if they meet the eligibility requirements. You can only pay voluntary National Insurance contributions to fill gaps for the previous six tax years. The deadline to make payment is 5 April each year. For example, you have until 5 April 2031 to pay voluntary contributions to make up a gap for the 2024-25 tax year.

It is recommended to check your National Insurance record as this can affect your future entitlement to the State Pension and other benefits.

By using the online service, you can see what National Insurance contributions you have paid up to the start of the current tax year, along with any National Insurance credits you have received. The record also highlights whether there are gaps in your contribution history. This will highlight tax years that do not count as qualifying years for State Pension purposes. These gaps can arise for a variety of reasons, such as periods of low earnings, time spent working abroad or career breaks.

The service also shows whether you are eligible to make voluntary National Insurance contributions to fill any missing years and how much this would cost. Importantly, it allows you to see how your State Pension forecast could change if you decide to make those additional contributions, helping you decide whether paying voluntarily contributions would be beneficial.

Employees with a second job, third job or more may be able to defer or delay paying Class 1 National Insurance on their additional employment. This deferment can be requested when Class 1 National Insurance contributions are being paid to more than one employer.

If you have 2 jobs, over the tax year you’ll need to earn:

• £967 or more per week from one job over the tax year.
• £242 or more per week in your second job

If you have more than 2 jobs, over the tax year you’ll need to earn:

• £1,209 or more per week from 2 of those jobs
• £242 or more per week in your other jobs

This deferral could result in NIC deductions at a reduced rate of 2% on your weekly earnings between £242 and £967 in one of your jobs, instead of the standard rate of 8%.

If you are allowed to defer, HMRC will inform you which employer is your main one for full Class 1 National Insurance contributions and which employers you can pay at the reduced 2% rate, sending those employers a certificate of deferment. HMRC does not share information about your other jobs with your employers.

HMRC will check if you have paid enough National Insurance at the end of the tax year and will write to you if you owe anything.

Claiming Child Benefit can provide an important benefit by granting National Insurance credits.

If you claim Child Benefit and your child is under 12, you will automatically receive National Insurance credits. This in turn will protect your contribution record during periods of home responsibility.

The child benefit rates for the only or eldest child in a family is currently a weekly amount of £26.05 and the weekly rate for all other children is £17.25. Child Benefit is usually paid every 4 weeks. There is no limit to how many children parents can claim for.

These credits are important because they count towards your State Pension, ensuring that there are no gaps in your National Insurance record. This is particularly valuable if you are not working or if you are not earning enough to pay National Insurance contributions, as it helps build your entitlement to a State Pension.

However, if you do not need the National Insurance credits yourself, your family may still be able to benefit. In such cases, your husband, wife, or partner can apply to transfer the credits to themselves. Alternatively, if another family member is providing care for your child, they can apply for Specified Adult Childcare credits to ensure they also receive the National Insurance credits. This system allows families to protect their State Pension entitlements, even if one parent or caregiver is not earning an income.

The High Income Child Benefit Charge (HICBC) currently applies to taxpayers whose income exceeds £60,000 in a tax year and who are in receipt of Child Benefit. The HICBC is charged at the rate of 1% of the full Child Benefit award for each £200 of income between £60,000 and £80,000. For taxpayers with income above £80,000 the amount of the charge will equal the amount of Child Benefit received.

Taxpayers can choose whether to continue receiving Child Benefit and pay the charge or opt out of receiving it to avoid the charge altogether. It is usually beneficial to claim Child Benefit as doing so can safeguard the National Insurance credits and also ensure your child automatically receives a National Insurance number at or just before they turn 16 years old.

In many circumstances it can be beneficial for taxpayers to make voluntary Class 2 National Insurance Contributions (NICs) to increase their entitlement to benefits, including the State or New State Pension if they are self-employed.

Taxpayers might want to consider making voluntary NICs because:

• They are close to State Pension age and do not have enough qualifying years to get the full State Pension
• They know they will not be able to get the qualifying years they need to qualify for the full State Pension during their working life
• They are self-employed and do not have to pay Class 2 contributions because they have low profits or live outside the UK, but want to qualify for some benefits

There is also a specific list of jobs where Class 2 NICs are not payable. These are:

• examiners, moderators, invigilators and people who set exam questions
• people who run businesses involving land or property
• ministers of religion who do not receive a salary or stipend
• people who make investments for themselves or others – but not as a business and without getting a fee or commission

If you know any taxpayers that fall within any of these categories it may be beneficial to get a State Pension forecast and examine whether they should make voluntary Class 2 NICs to make up missing years.

If you have lost or forgotten your National Insurance number you should try and locate the number on paperwork such as your tax return, payslip or P60. You can also login to your personal tax account to view, download, print, save or share a letter with your National Insurance number.

If you do not already have a National Insurance number then you will normally need to apply for one if you are planning to work in the UK, claim benefits, apply for a student loan or pay Class 3 voluntary National Insurance contributions.

However, HMRC’s guidance presently states that: You can currently only apply for a National Insurance number in England, Scotland and Wales if you have entered the UK on a visa. You cannot apply for a National Insurance number in Northern Ireland. This is due to Coronavirus (COVID-19) disruption.

You can, however, start work without a National Insurance number if you can prove you can work in the UK.  You can also apply for benefits or a student loan without a National Insurance Number.

Teenagers should automatically be sent a letter just before their 16th birthday detailing their National Insurance number. These letters should be kept in a safe place. The old plastic National Insurance cards that some of our readers may remember are no longer available.

National Insurance credits can help qualifying applicants to fill gaps in their National Insurance record. This can assist taxpayers to build up the amount of qualifying years of National Insurance contributions which can increase the amount of benefits a person is entitled to such as the State Pension.

National Insurance credits are available in certain situations where people are not working and, therefore, not paying National Insurance credit. For example, credits may be available to those looking for work, who are ill, disabled or on sick pay, on maternity or paternity leave, caring for someone or on jury service.

The CA9176 form is used to apply for National Insurance childcare Class 3 credits if you are an adult family member caring for a child under 12 (usually while the parent or main carer is working). This form has been updated to include care that is being provided from a distance because of Coronavirus (COVID-19) – for example, by telephone or video if the carer was required to self-isolate. This Coronavirus measure applies to the 2019-20 and 2020-21 tax years.

Depending on your circumstances, National Insurance credits may be applied automatically or an application for credits may be required. There are two types of National Insurance credits available, either Class 1 or Class 3. Class 3 credits count towards the State Pension and certain bereavement benefits whilst Class 1 covers these as well as other benefits such as Jobseeker’s Allowance.