Minding the gap: NICs top-up deadline extended

The rush to meet the voluntary national insurance contributions (NICs) top-up deadline of 5 April has forced HMRC to grant an extension to 31 July.

The last major reform to state pensions took effect on 6 April 2016. From that date the second state pension and basic state pension were replaced by the new state pension for anyone reaching state pension age. The new state pension was higher than its basic predecessor, but it came with two less attractive features:

· Instead of a minimum of one year’s NICs record to claim any entitlement, the requirement was raised to ten years; and

· The NIC record needed to obtain the full pension was increased from 30 years to 35 years.

To help people fill gaps in their NIC record and thereby gain more state pension, the government relaxed the normal rule that voluntary NICs to infill missing years could be backdated by no more than six years. Instead, voluntary contributions covering the ten years before the start of the new regime could be made at any time up to 5 April 2023. This loosening of the rules was first announced in April 2013.

A necessary extension

As can happen when deadlines are set a decade into the future, their relevance can be forgotten or ignored until nearly the last moment, at which point there is a mad rush – think of ISA tax-year-end investment but multiplied by ten. On this occasion, the surge was exacerbated by stories in the national press giving extreme (but accurate) examples where a single payment of £824 can make the difference between no pension and one of over £3,000 a year. In more normal instances, the £824 could buy an extra £302 a year of pension – still a highly attractive deal.

Unfortunately, the deadline rush meant a flood of enquiries for HMRC and the Department for Work and Pensions, neither of which are renowned for their swift responses. By early March, the Treasury was forced to announce that “to ensure customers do not miss out, the government intends to extend the 5 April deadline to pay voluntary NICs to 31 July this year.”

If you think this could be relevant to you and you have not yet taken any action, then you need to do so now. Another deadline extension is most unlikely.

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