State Pension - Tax relief on contributions to make up shortfall

Trebor11111

I’m not in work and due to take my state pension next Feb and have 5 years of shortfalls.  My question is:  If I pay in to make up the shortfall will the payment be subject to tax relief? 

I’ve called the appropriate organisations but don't have an answer to my question. My thinking is based on the fact that when in work NI payments are taken before tax plus most other pension payments attract tax relief.    However, now if I make up the shortfall it will be from income that has already been taxed. Then when I receive the state pension this will be subject to tax; thus I will be paying tax twice.

p00hsticks

No it won't be subject to tax relief.

The state pension is taxable, but if it is your only income then you wouldn't be paying any tax on it so you can't argue that you'd be paying tax twice.

Making voluntary contributions to get up to the maximum is incredible good value for money if you have even reasonable life expectancy, so well worth doing if you can afford it - although there are a few things worth checking;

a) the fifth year may not be worth paying for as it might not generate as much income as the other four (as it will ony ltake you up to the maximum allwed value)

b) Any years prior to 2016 may not increase your pension amount ,depending on your individual circumstances

c) Making contributions for the current tax year (2021-22) will not increase your forcast as it is the year in which you reach State Pension Age

If you post up the precise detail from your State Pension Forecast people on here will be able to tell you which years are worth buying (or you can get in touch with the Future Pension Centre for advice)

https://www.gov.uk/future-pension-centre

Albermarle

As above, even without tax relief, it will most likely be the best ever investment you will ever make. 

SomeMadeUpName

Anyway, when working your NI is indeed based on your gross payment, but so is your tax.  So there is no tax relief on NI whilst working and ergo none available if paying later.