Deadline to backdate National Insurance contributions draws close

As the end of the tax year approaches, we look at the changes to the voluntary National Insurance rules, which will impact on the ability of individuals to make contributions for previous years.

Tax practitioners will often review their client’s National Insurance history and discuss any follow up action needed, in order to maintain eligibility to state benefits such as state pension. Where an individual has a gap in their National Insurance history, such as if they have not been working or in receipt of eligible state benefits, they have the option to pay voluntary contributions to increase the number of qualifying years.

Impact of Child Benefit on National Insurance credits

Even when a taxpayer is not working, claiming child benefit can itself accrue National Insurance credits for the claimant. However, when High Income Child Benefit Charge (HICBC) was introduced, many affected households chose not to claim child benefit to avoid HICBC being payable.

If the child benefit claimant was not otherwise receiving National Insurance credits, it is possible that there may be gaps in the contribution’s history. As mentioned in our article in January 2024, from April 2026, there will be the option to claim national insurance credits for a child benefit claimant affected by HICBC. Initially there will be transitional arrangements so that claims can be backdated to the start of HICBC in 2013, but eventually it will only be possible to make an application for six years following the end of the relevant tax year.

Filling remaining gaps in an individual’s National Insurance history

Individuals who are unable to rely on the National Insurance credit for households affected by HICBC might need to review their position ahead of the end of the current tax year. In summer 2023, the government announced an extension to the rules for voluntary National Insurance contributions, where eligible, for men born after 5 April 1951 and women born after 5 April 1953. 

Individuals are currently able to pay voluntary contributions for tax years as far back as April 2006. This was originally due to change in July 2023, but the government extended the deadline until 5 April 2025. Individuals only therefore 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.

From 6 April 2025 onwards, it will only be possible to backdate voluntary contributions for six tax years. The approach of the end of the tax year will give an opportunity to consider whether any action is needed before the rules change.

Online service to support with National Insurance contributions for earlier years

As mentioned in our article in May 2024, HMRC has launched a digital service that enables individuals to identify gaps in their contributions history and make the necessary payment to ensure that any missing years can be treated as qualifying. Using the platform, individuals can access details of their National Insurance contribution record and determine how much their state pension could increase if voluntary contributions were paid for any years where there is a gap. 

Those under state pension age should be able to directly see the cost in terms of voluntary contributions, as well as the improvement in their state pension if the relevant contributions are made. They will then be given the option to make the required payment electronically so that their contributions can be updated more quickly than previously.

Unfortunately, there is no agent access to this service, so it is definitely worth having discussions with clients who may need to review their National Insurance contribution history, so that any action can be taken ahead of the end of the tax year.

Let us know your views 

We also welcome your views, which help inform our work on consultations or other tax-related matters. 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. 

Please email us to share your insights and feedback.

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