Can you backdate NI contributions?

hdelaney

Question from my boss this morning. His wife has been self employed for some years but now has to stop working. He wants to continue paying NI contributions for her but I seem to remember that you can actually pay any missed NI contributions later (bearing in mind that if you die before reaching retirement age then any benefit has been lost). She is currently mid 40s. Is this true? What are the restrictions? Any help gratefully received.

Midas

The short answer is yes you can, but within certain restrictions (I think it's up to a maximum of 7 years back, but that may be incorrect).

If she was to request a state pension forecast from The DWP Pension Service and they find gaps in her contribution record, they will provide further details of how the shortfall can be made up.

Debt_Free_Chick

Depending on her circumstances, she may get NI automatically credited to her record. Need more information, though

EdInvestor

It's a really good idea IMHO for everyone to request a free state pension forecast so they know where they are, how much is "in the kitty" already and can fill in any gaps in their record.See link above.This is an easy one to get sorted

hdelaney

Hi - thanks for info. so far.

She is currently up to date with NI contributions but he is wondering about the way forward from now on. Pay regularly now or save up the contributions in an account somewhere any pay later. Can he do this? If so, how regularly would he need to pay? Somebody mentioned 7 years. Is this right, and would she be chased by letter to offer her the chance to top up later or would she need to make a note for herself to pay sometime in the future? Thanks in advance.

Debt_Free_Chick

More information needed ...... she may get credits, especially, if she is unable to work. Will she be claiming any benefits? Incapacity benefit? JSA? Income Support? Will she be caring for a disabled person?

What happens to her future NI, depends on her circumstances.

If missed NI have to be paid, then you must pay them within 6 years of the end of the tax year to which the missed NI relate.

However - sorry to repeat this - she may not have any missed NI. She may be credited with having paid NI or have the qualifying years for benefits (esp State Pension) reduced, depending on her circumstances.

Information about paying Voluntary NIC from the Inland Revenue HERE

Full information on all NIC HERE

Midas

Yes I think you can get credits for being a 'homecarer' or something similar - i.e. even if she's not on benefit but looking after dependents.

hdelaney

Actually she is just giving up work - not claiming any benefits of anything. She just wants to only pay the NI contributions when she has to instead of every week/month etc.

ManAtHome

I requested a forecast last year after they sent me a letter saying I'd missed a year (1999/2000 - their mistake, now sorted). As part of the notes it said (slightly cut-down version...):

For Tax Years 1996/7 to 2001/2 you can make voluntary class-3 contribs of £335.40 pa up to the deadline of 5th April 2008.

For later tax years (2002/3 onwards) the amounts may change if they are paid more than 2 years after the end of the tax year (you need to contact the IR for details of the new amount). So looks like they may be adding interest to encourage you not to stash your cash for 6 years - sorry, only the messenger.

Milarky

hdelaney wrote:

Actually she is just giving up work - not claiming any benefits of anything. She just wants to only pay the NI contributions when she has to instead of every week/month etc.

echoing the previous post, it will get more expensive as time goes by to make up missed years in the future - presumably one reason why they raise the cost or people will do just this and put off paying NICs.

However there is the question of how many years she could stop paying NICs altogether just to qualify for the full flat rate pension? This may be five years short of the relevent 'working-lifetime' of 16-60 for woman [if born before 1950] or 16-65 [born after 1960] under the rules. There is also home responsibilty protection [HRP] which can shorten the time still further. Hence the very good advice about getting a pension forecast which ought to say how many more years she needs for a full pension and how many more years she has in which she has to get there. If the former number is less than the latter then stopping paying Class 3 [voluntary] for a while may make sense. Class 3 cost about £5 a week more than Class 2 and don't maintain eligibility to Incapacity Benefit - which self employed people can in theory receive.

However even Class 3 will get dearer into the future, so that the best all round option is to start paying them now and to plan to stop paying before reitirement at the point at which a full pension [with no further contributions] would be forecast.