Year End Tax Review 2023/2024 – Blog 5 – Will you get a full state pension

If you are looking forward to retirement, it’s a good idea to check out how much state pension you will get. You can do this by logging on to your personal tax account on gov.uk, which contains lots of useful information about how much tax you owe and about your National Insurance Contributions (NIC) record, among other things.

To receive the full amount of the state pension, your NIC record needs to contain 35 complete years. You need at least ten complete NIC years to receive any amount of the UK state retirement pension.

Planning points

• You can plug gaps in your NIC record by paying voluntary Class 3 NIC. This payment generally needs to be made within six years of the gap year. However, currently there is a dispensation that allows women born after 5 April 1953 and men born after 5 April 1951 to complete gaps in their NIC records right back to 6 April 2006. You can pay the voluntary NIC at the 2022/2023 rate of £15.85 per week instead of the current rate of £17.45 per week. This opportunity to make up these old years with voluntary NIC payments closes on 5 April 2025.

• Self-employed traders who don’t have to pay Class 2 NIC because their profits are below £6,725 can choose to pay Class 2 NIC voluntarily instead of Class 3 NIC; paying Class 2 NIC will cost less. For 2023/2024, where profits are between £6,725 and £12,570, no Class 2 NIC are payable, but the trader still gets a NIC credit for the full year.

• You may also qualify for NIC credits for some years if you were claiming state benefits, Child Benefit or were a foster carer. The NIC credits were not always applied automatically, so it is worth checking your own NIC record in your personal tax account.

The information in this blog provides only an overview of HMRC guidance and legislation in force at the date of publication and no action should be taken without consulting the detailed HMRC guidance and legislation or seeking professional advice.  Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this blog can be accepted by the firm.