Guide discussion: Voluntary national insurance contributions

norfolkandnorwich

@Silvertabby thank you for explaining.

If I understand you correctly, your decision to proactively contact HMRC was to prompt them to adjust your tax code straight away, to avoid a delay when tax arrears would build up. Does that therefore mean your SP has the BR code applied to it?

Am I also right in thinking that the method used by HMRC to collect the tax due was not a matter you were concerned with - ie it makes no difference which pension has the tax code applied to it and which ones are taxed at BR?

I'm in a similar situation - already retired and in receipt of my own LGPS pension which has my tax code  applied to it (not BR as I previously stated) and I'm also in receipt of a widow's LGPS pension from my late husband's employer which is taxed at BR.

Dazed_and_C0nfused

norfolkandnorwich said:

@Silvertabby thank you for explaining.

If I understand you correctly, your decision to proactively contact HMRC was to prompt them to adjust your tax code straight away, to avoid a delay when tax arrears would build up. Does that therefore mean your SP has the BR code applied to it?

Am I also right in thinking that the method used by HMRC to collect the tax due was not a matter you were concerned with - ie it makes no difference which pension has the tax code applied to it and which ones are taxed at BR?

I'm in a similar situation - already retired and in receipt of my own LGPS pension which has my tax code  applied to it (not BR as I previously stated) and I'm also in receipt of a widow's LGPS pension from my late husband's employer which is taxed at BR.

State Pension never has tax deducted from it.

A year or two back a few people on here reported delays with State Pension being included in their tax code but no one has mentioned it for a while now so it seems things between DWP and HMRC are working as normal again.

You would normally expect a new tax code (for your LGPS pension) within a couple of weeks of your State Pension starting.

norfolkandnorwich

@Dazed_and_C0nfused Thanks so much for your prompt post. 

I wasn't aware of the SP non-tax deduction practice so that's very helpful. And, it's good to know about the situation between DWP and HMRC and puts @Silvertabby comments about their experience a few years ago into context too.

I'll bear all that useful information in mind come March/April 2026!

Dazed_and_C0nfused

norfolkandnorwich said:

@Dazed_and_C0nfused Thanks so much for your prompt post. 

I wasn't aware of the SP non-tax deduction practice so that's very helpful. And, it's good to know about the situation between DWP and HMRC and puts @Silvertabby comments about their experience a few years ago into context too.

I'll bear all that useful information in mind come March/April 2026!

One thing to be aware of.

If you are already liable to tax on your existing pension then when you start to receive the State Pension your tax code will normally be revised to include the annual amount of State Pension, not the actual amount you will receive in the first tax year you receive it.

But that revised tax code will be used on a non-cumulative basis, it won't look back at what has happened earlier in that tax year.

BB59KD

Phoned HMRC around 5pm last Thursday afternoon to discuss voluntary contributions in advance of reaching SPA July 2025. All done and dusted and armed with 18 digit reference number by 5.20pm. Very good service.
 The only problem was that part way through, an automated voice said "Thank you for calling - goodbye" and cut me off. This is a system fault apparently. Make sure the person you are speaking to takes a contact number at the beginning of your conversation so that they can call you back. The 18 digit reference number is valid until 5 April 2025.

Jimbob52

My wife who is retired but not yet at pensionable age recently purchased 5 years of NI contributions which still does not take her projected pension to the maximum as she was contracted out. She was told by the Pension advice centre at the time she could only go back six years when purchasing additional years however Martins recent blog on this says you can purchase any year back to 2006. We have tried again this morning to purchase the year 2006 as it was already partly filled with NI contributions but have been told we cannot buy this year as it will make no difference to the final pension payment. How can this be when her current projected pension is £16 per week below the maximum?

Dazed_and_C0nfused

Jimbob52 said:

My wife who is retired but not yet at pensionable age recently purchased 5 years of NI contributions which still does not take her projected pension to the maximum as she was contracted out. She was told by the Pension advice centre at the time she could only go back six years when purchasing additional years however Martins recent blog on this says you can purchase any year back to 2006. We have tried again this morning to purchase the year 2006 as it was already partly filled with NI contributions but have been told we cannot buy this year as it will make no difference to the final pension payment. How can this be when her current projected pension is £16 per week below the maximum?

Countless posts on here explaining that.

Sarahspangles

Jimbob52 said:

My wife who is retired but not yet at pensionable age recently purchased 5 years of NI contributions which still does not take her projected pension to the maximum as she was contracted out. She was told by the Pension advice centre at the time she could only go back six years when purchasing additional years however Martins recent blog on this says you can purchase any year back to 2006. We have tried again this morning to purchase the year 2006 as it was already partly filled with NI contributions but have been told we cannot buy this year as it will make no difference to the final pension payment. How can this be when her current projected pension is £16 per week below the maximum?

Some people can benefit from buying earlier years because it increases the baseline at 2016 from which they can then build new state pension entitlement (NSP). But for some it doesn’t make a difference, so they don’t need to buy those years. The system has blocked your purchase, so it’s working correctly.

There is a group of people coming up to retirement age soon who could never qualify for full NSP because there aren’t enough years between 2016 and their retirement to achieve that. However their original plan was to retire with basic state pension (BSP) and (through opting out) additional pension from a workplace scheme. So being able to also purchase any NSP years is a bonus.

molerat

Sarahspangles said:
There is a group of people coming up to retirement age soon who could never qualify for full NSP because there aren’t enough years between 2016 and their retirement to achieve that. However their original plan was to retire with basic state pension (BSP) and (through opting out) additional pension from a workplace scheme. So being able to also purchase any NSP years is a bonus.

The vast majority of those who cannot reach the full new pension have already reached retirement. From April 2025 everyone will be able to get the full new pension (bar those with little / no contribution history), 24-25 is the last of the maximum 9 years needed on top of 30 pre 2016 years - those retiring this year would be £1.14 short.

intalex

Quick question on voluntary contributions and state pension age reviews:
It is known how many (available) years are left to be able to pay until state pension age, whether through working or voluntary NICs, in order to increase the count of qualifying years. It is based on this that the maximum possible state pension is specified on the online state pension record. If now the state pension age was increased from 67 to 68, would the (available) years left to pay and accordingly the maximum possible state pension also be higher?