The payment of voluntary national insurance contributions can make a difference to your entitlement of a state pension and other benefits, explains Preston Accountant, Gary Alker. There maybe reasons why your national insurance record has gaps, such as low earnings, living abroad, or unemployment and have not been claiming benefits.
Class 3 National Insurance
In some circumstances, it may be possible, to pay voluntary national insurance, as Class 3 National Insurance Contributions, and this may be beneficial.
You can receive national insurance credits if you are unable to work, or specific circumstances, such as jury service, or if you care for a child, a sick or disabled person.
Paying voluntary national insurance is possible for any tax year you are aged over 16 and are:
- employed, but not liable to pay Class 1 and/or Class 2 contributions (because earnings are too low to qualify)
- excepted from paying Class 2 contributions (because earnings from self-employment have not reached the entitlement threshold)
- not working
- resident in the UK but living or working on secondment abroad
The rate for class 3 national insurance is £14.25 per week in the current tax year (2017/18) and you need to make good any shortfall within six years of the year you want to add the contributions to.
If you are self-employed you may be exempt from paying Class 2 national insurance because your income is below the small profits threshold (£6,025 for 2017/18), but you can still pay voluntary Class 2 contributions to maintain your national insurance record. These are much lower than Class 3 contributions (the rate for 2017/18 is £2.85 per week) and they protect entitlement to more benefits.
Class 2 national insurance will be abolished from April 2018, so it may be worth checking national insurance records before then.
The HMRC website will show you how to make these additional contributions if you decide.
Contact Preston Accountant-Alker Accounting
Please contact Gary Alker of Alker Accounting located in Preston if you require any further advice.