Back in March, we sent out a reminder to ensure that your national insurance contribution (NIC) record was up to date, and to highlight how any gaps could impact your eligibility for state retirement benefits. The original deadline for paying voluntary Class 3 NIC, to address any NIC deficiencies dating back to the 2006/07 tax years, was 5 April 2023.
Unfortunately, many taxpayers have been struggling to pay their Class 3 NIC online due to long wait times when calling HMRC. As a result, the government has decided to extend the deadline for Class 3 NIC payments to 31 July, 2023, for all periods dating back to 6 April, 2006.
This extension is particularly relevant for those born after 5 April, 1951 (men) or 5 April, 1953 (women), who may be up to 70 years old. If you are under 45, you still have many years of work ahead of you and can opt to pay Class 1 or Class 2 NIC instead, rather than paying Class 3 NIC to cover any existing gaps.
Furthermore, the government has decided to allow taxpayers to pay Class 3 NIC at the 2022/23 rate (£15.85 per week) until 31 July, 2023, rather than the 2023/24 rate of £17.45 per week. Ultimately, whether to pay voluntary Class 3 NIC is a decision that requires careful consideration. You need to evaluate whether the investment is worth it and whether paying extra NIC now will result in a sufficient increase in your state pension over your expected lifetime.
If you need assistance in determining whether paying voluntary Class 3 NIC for particular years will increase your pension, please contact the CBReid Team to discuss options.