Paying NI for my last working year in time for my pension

carterbrandon

I am due to retire in June 2030. My State Pension Summary says 'Forecast if you contribute another 6 years before 5 April 2030: <full pension amount>'. To achieve this, I will need to contribute for the 2029/30 tax year. BUT...

I am self employed. Usually I get a bill for my Class 2 contributions after I have done my tax return, which comes about 9 months after the end of the tax year. If this were to happen for the 2029/30 tax year, the payment would happen well after 5th April 2030 and my retirement, so presumably I wouldn't get the benefit of 35 years, only 34.

How do I work this, so that I get full state pension? Is there a mechanism for paying during the 2029/30 year, before I get billed?

QrizB

You could submit your tax return earlier? 31st Jan is a deadline, not a target.

carterbrandon

Well I can't submit it before 5/4/2030, which is when the Summary says I have to have contributed by! And even if that wasn't true and I did submit it right away, that only gives a couple of months for them to bill me and me to pay up, before I retire.

QrizB

carterbrandon said:

Well I can't submit it before 5/4/2030, which is when the Summary says I have to have contributed by! And even if that wasn't true and I did submit it right away, that only gives a couple of months for them to bill me and me to pay up, before I retire.

I can't speak for your situation (it might be very different) but my wife is self employed and pays Class 2s. HMRC usually tell her what's due within a couple of working days of her submission.

Marcon

Any reason it can't be paid after the end of the tax year, and your state pension would be topped up by the extra year from the time you make payment - or do you have any earlier years (in the last 6) which aren't 'full' and could be topped up now?

af1963

Marcon said:

Any reason it can't be paid after the end of the tax year, and your state pension would be topped up by the extra year from the time you make payment - or do you have any earlier years (in the last 6) which aren't 'full' and could be topped up now?

Little point in paying extra to top up a past year, if OP ends up working and paying NI for all 6 future years anyway. But as you say, should be OK to just pay after the end of the tax year and before the pension starts.

Or even if it's paid after retirement and OP doesn't get the full amount right from the start, it will be a one off loss of a few pounds, and the ongoing amount will increase once it's been paid.

Worth checking how much that final year's payment delivers. It may be that it only adds a small amount to the pension anyway.

carterbrandon

QrizB said:

carterbrandon said:

Well I can't submit it before 5/4/2030, which is when the Summary says I have to have contributed by! And even if that wasn't true and I did submit it right away, that only gives a couple of months for them to bill me and me to pay up, before I retire.

I can't speak for your situation (it might be very different) but my wife is self employed and pays Class 2s. HMRC usually tell her what's due within a couple of working days of her submission.

I hand my details to my accountant around June after end of tax year, have my tax return submitted in August, and then it takes till November/December before they bill me for my contributions. I could do my part quicker, but having them respond by June seems a challenge. They seem to take much longer to get back to me than you.

carterbrandon

Marcon said:

Any reason it can't be paid after the end of the tax year, and your state pension would be topped up by the extra year from the time you make payment - or do you have any earlier years (in the last 6) which aren't 'full' and could be topped up now?

There's a very slim chance I might get credit for 1 year 20 years ago (that would take me over 35 years in time), but otherwise I'd have to pay for every full year from now to retirement. It's interesting you say 'Any reason it can't be paid after the end of the tax year', because the State Pension Summary says 'Forecast if you contribute another 6 years before 5 April 2030:' That seems to me to imply that I can't pay after the end of the last full tax year.

Even though one last year might only get me a few quid extra a week, I plan to stay alive long enough for it to be worth it!

carterbrandon

af1963 said:

Marcon said:

Any reason it can't be paid after the end of the tax year, and your state pension would be topped up by the extra year from the time you make payment - or do you have any earlier years (in the last 6) which aren't 'full' and could be topped up now?

Little point in paying extra to top up a past year, if OP ends up working and paying NI for all 6 future years anyway. But as you say, should be OK to just pay after the end of the tax year and before the pension starts.

This is where I get confused. End of tax year is early April, pension starts in mid June. That's a narrow window to get the final accounts and billing and payment all done.

p00hsticks

Any reason why you can't pay monthly direct debits during the year ?
Apply to pay self-employed National Insurance by Direct Debit - GOV.UK