An individual’s eligibility for the State Pension is influenced by their National Insurance record, which consists of the following:
To qualify for the maximum 'new State Pension' (received by those retiring on or after 6 April 2016), individuals must have at least 35 qualifying years of NICs. For part payment of the ‘new State Pension’, they must have contributed for at least 10 years.
A partner in a professional firm might not have made sufficient NI contributions in a tax year in the following circumstances:
If individuals have not contributed enough prior to reaching State Pension age, then they can make voluntary NI contributions to top up their contribution history. Typically, voluntary contributions can only be made for the prior six tax years, however, there is currently an extension in place, meaning voluntary contributions can be made for prior tax years spanning back to 6 April 2006.
This extension is in place until 31 July 2023 and therefore individuals should take the opportunity to check their NI record to identify any shortfalls in their NI history. If a shortfall is identified, individuals should take appropriate financial advice as it may be beneficial to make voluntary NI contributions before the 31 July 2023 to ensure entitlement to the full State Pension.
Taxpayers should also check that their record is correct and includes NI contributions paid through PAYE or self-assessment, and NI credits earned. HMRC should be contacted to correct any errors.
Taxpayers can check their NI record and can contact HMRC about NIC.
For further information, please speak to your usual Crowe contact or get in touch with our Financial Planning team.
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