HMRC extends the deadline for voluntary national insurance contributions
By Chris Campbell, Head of Tax (Tax Practice and Owner Managed Business Taxes)
14 June 2023
Chris Campbell explains the further changes to the voluntary national insurance rules, which were due to take effect in July 2023.
What changes have been announced to voluntary national insurance contributions?
Individuals who are employed and/or self-employed will normally pay national insurance contributions in line with their earnings. Entitlement to state benefits (such as state pension and Employment and Support Allowance) will be based on the number of qualifying years that an individual has accrued over their working life.
As mentioned in our previous article back in March 2023, where eligible, a man born after 5 April 1951 or a woman born after 5 April 1953 is currently able to pay voluntary contributions for tax years as far back as April 2006.
This was due to change from 6 April 2023 so that voluntary contributions could be backdated by only six tax years, but the Financial Secretary to the Treasury, Victoria Atkins, announced in the Spring that the deadline would be extended to 31 July 2023. This is because the original 6 April 2023 deadline resulted in a surge in contact with HMRC and the Department for Work and Pensions.
The Financial Secretary to the Treasury has recently announced that the deadline is now being extended again to 5 April 2025.
What does this new extension mean?
Individuals will now have up to 5 April 2025 to be able to pay voluntary contributions from the original April 2006 to April 2016 period, as well as for the 2016/17 and the 2017/18 tax years. HMRC has confirmed that 2022/23 national insurance rates will apply for the voluntary contributions being made retrospectively for the 2006/07 to 2017/18 tax years.
This new extension will give tax practitioners more time to assist their clients to identify where there are gaps in their national insurance record, so that they can decide whether to make voluntary contributions to maintain their entitlement to state benefits.
HMRC plans to improve its digital service, so that most individuals should be able to deal with the voluntary contributions process online.
From 6 April 2025 onwards, it will only be possible to backdate voluntary contributions for six tax years.
Let us know your views
We welcome members’ input to inform our work on consultations or other tax-related matters – email us to share your insights and feedback. ICAS responds to many tax calls for evidence and consultations, as well as producing tax policy papers and reports. We also regularly attend meetings with HMRC at which service levels, delays and other issues are discussed, and we raise problems being encountered by members.
