Category: National Insurance

Filling in NIC contribution gaps

National Insurance credits can help qualifying applicants to fill contribution gaps in their National Insurance record. This can help taxpayers increase their number of qualifying National Insurance years, which may increase the number of benefits they are entitled to, such as the State Pension.

This could happen if someone was:

• employed but had low earnings
• unemployed and were not claiming benefits
• getting National Insurance credits for less than a full tax year
• self-employed but did not pay contributions because of small profits
• living or working outside the UK.

National Insurance credits are available in certain situations where people are not working and therefore, not paying National Insurance contributions. For example, credits may be available to those looking for work, who are ill, disabled or on sick pay, on maternity or paternity leave, caring for someone or on jury service.

Depending on the circumstances, National Insurance credits may be applied automatically or an application for credits may be required. There are two types of National Insurance credits available, either Class 1 or Class 3. Class 3 credits count towards the State Pension and certain bereavement benefits whilst Class 1 covers these as well as other benefits such as Jobseeker’s Allowance.

Taxpayers may also be able to pay voluntary Class 2 or Class 3 National Insurance contributions to protect their entitlement to the State Pension (and in some cases other benefits) if they meet the eligibility requirements. You can only pay voluntary National Insurance contributions to fill gaps for the previous six tax years. The deadline to make payment is 5 April each year. For example, you have until 5 April 2031 to pay voluntary contributions to make up a gap for the 2024-25 tax year.

Check your National Insurance record

It is recommended to check your National Insurance record as this can affect your future entitlement to the State Pension and other benefits.

By using the online service, you can see what National Insurance contributions you have paid up to the start of the current tax year, along with any National Insurance credits you have received. The record also highlights whether there are gaps in your contribution history. This will highlight tax years that do not count as qualifying years for State Pension purposes. These gaps can arise for a variety of reasons, such as periods of low earnings, time spent working abroad or career breaks.

The service also shows whether you are eligible to make voluntary National Insurance contributions to fill any missing years and how much this would cost. Importantly, it allows you to see how your State Pension forecast could change if you decide to make those additional contributions, helping you decide whether paying voluntarily contributions would be beneficial.

Defer paying Class 1 National Insurance on a second job

Employees with a second job, third job or more may be able to defer or delay paying Class 1 National Insurance on their additional employment. This deferment can be requested when Class 1 National Insurance contributions are being paid to more than one employer.

If you have 2 jobs, over the tax year you’ll need to earn:

• £967 or more per week from one job over the tax year.
• £242 or more per week in your second job

If you have more than 2 jobs, over the tax year you’ll need to earn:

• £1,209 or more per week from 2 of those jobs
• £242 or more per week in your other jobs

This deferral could result in NIC deductions at a reduced rate of 2% on your weekly earnings between £242 and £967 in one of your jobs, instead of the standard rate of 8%.

If you are allowed to defer, HMRC will inform you which employer is your main one for full Class 1 National Insurance contributions and which employers you can pay at the reduced 2% rate, sending those employers a certificate of deferment. HMRC does not share information about your other jobs with your employers.

HMRC will check if you have paid enough National Insurance at the end of the tax year and will write to you if you owe anything.

National Insurance credits and Child Benefit

Claiming Child Benefit can provide an important benefit by granting National Insurance credits.

If you claim Child Benefit and your child is under 12, you will automatically receive National Insurance credits. This in turn will protect your contribution record during periods of home responsibility.

The child benefit rates for the only or eldest child in a family is currently a weekly amount of £26.05 and the weekly rate for all other children is £17.25. Child Benefit is usually paid every 4 weeks. There is no limit to how many children parents can claim for.

These credits are important because they count towards your State Pension, ensuring that there are no gaps in your National Insurance record. This is particularly valuable if you are not working or if you are not earning enough to pay National Insurance contributions, as it helps build your entitlement to a State Pension.

However, if you do not need the National Insurance credits yourself, your family may still be able to benefit. In such cases, your husband, wife, or partner can apply to transfer the credits to themselves. Alternatively, if another family member is providing care for your child, they can apply for Specified Adult Childcare credits to ensure they also receive the National Insurance credits. This system allows families to protect their State Pension entitlements, even if one parent or caregiver is not earning an income.

The High Income Child Benefit Charge (HICBC) currently applies to taxpayers whose income exceeds £60,000 in a tax year and who are in receipt of Child Benefit. The HICBC is charged at the rate of 1% of the full Child Benefit award for each £200 of income between £60,000 and £80,000. For taxpayers with income above £80,000 the amount of the charge will equal the amount of Child Benefit received.

Taxpayers can choose whether to continue receiving Child Benefit and pay the charge or opt out of receiving it to avoid the charge altogether. It is usually beneficial to claim Child Benefit as doing so can safeguard the National Insurance credits and also ensure your child automatically receives a National Insurance number at or just before they turn 16 years old.

Paying Class 4 NICs

If you are self-employed and your profits are above £12,570, you may need to pay Class 4 National Insurance, so it is important to understand how the rates and rules apply to you.

Self-employed individuals are usually required to pay Class 4 National Insurance contributions (NICs) if their annual profits exceed £12,570. These contributions are calculated based on profits and are used to fund various state benefits, including the state pension, unemployment benefits and the National Health Service (NHS).

For the current 2025-26 tax year, Class 4 NIC rates are set at 6% on profits between £12,570 and £50,270, with an additional 2% charged on profits above £50,270.

Certain groups are exempt from paying Class 4 NICs, including:

• Individuals under 16 at the start of the tax year.
• Individuals over State Pension age at the start of the tax year. If someone reaches State Pension age during the tax year, they remain liable for Class 4 NICs for the entire tax year.
• Trustees and guardians of incapacitated individuals are exempt from paying Class 4 NICs on that income.

The Class 4 NIC rate is lower than the corresponding rate for employees, who pay 8% on the same income levels. Both employees and the self-employed contribute 2% on income above the higher rate threshold.

The majority of individuals pay Class 4 National Insurance via self-assessment.

Applying for Home Responsibilities Protection

Did you know a missing Home Responsibilities Protection (HRP) record could reduce your State Pension, but you may still have time to put it right.

Home Responsibilities Protection (HRP) was a scheme designed to help individuals, mainly those with caring responsibilities, to build entitlement to the basic State Pension by reducing the number of qualifying years required. HRP applied between 6 April 1978 and 5 April 2010, after which it was replaced by National Insurance (NI) credits.

Although most eligible individuals received HRP automatically during that period, some cases were missed. It’s still possible to apply for HRP retrospectively if it’s missing from your NI record. This is particularly relevant for women at or near State Pension age, especially those who took extended time off work to raise children. A missing HRP record could affect your State Pension entitlement, although not always.

Those affected should check their NI records for gaps and could potentially increase their State Pension at no cost. If a claim is successful, HMRC will update the NI record, and the DWP will recalculate the State Pension amount. This could lead to an increase in the State pension, though in some cases, it may remain unchanged.

Currently, HRP applications are taking over 3 months to process. For the most recent processing times and to check the status of an existing claim you can visit the official HMRC guidance page at www.gov.uk/guidance/check-when-you-can-expect-a-reply-from-hmrc

Applying for a National Insurance number

Working or claiming benefits in the UK? You may need to apply for a National Insurance number first. If you do not already have one, your NI number is essential for tracking tax, National Insurance contributions and accessing certain government services. While most UK residents receive their number at age 16, newcomers or those starting work later in life may need to apply. It takes around four weeks to process after proving your identity, but you can still start work or claim some benefits while you wait.

According to HMRC guidance, you can apply for a National Insurance number if you:

• live in the UK,
• have the legal right to work in the UK, and
• are working, looking for work, or have a job offer.

You can still start work without an NI number, as long as you can prove your right to work in the UK. Similarly, you can apply for benefits or a student loan without an NI number, though you may be asked to provide one later if required.

Most teenagers living in the UK receive a letter shortly before their 16th birthday confirming their NI number. This letter is important and should be kept safe. Your NI number is unique and stays the same for life, even if your name, address or nationality changes. If you lose your NI number, you can find it on official documents like payslips, P60s or via your personal tax account.

Don’t forget to pay your Class 1A NIC

Employers must act now to meet the deadline for paying Class 1A NICs for 2024–25 to avoid HMRC penalties. These contributions are due by 19 July 2025 if paying by post, or by 22 July 2025 for electronic payments. Class 1A NICs apply to most taxable benefits given to employees and directors, including company cars and private medical cover. Employers should ensure payments are correctly referenced using their Accounts Office reference number and clearly mark the relevant tax year. Importantly, July payments always relate to the previous tax year, even if made in the new tax year.

Class 1A NICs are payable by employers on the value of most taxable benefits offered to employees and directors, such as company cars and private medical insurance. They also apply to any portion of termination payments exceeding £30,000, provided Class 1 NICs have not already been deducted.

To ensure payments are correctly allocated, employers should use their Accounts Office reference number as the payment reference and clearly indicate the relevant tax year and month. Note that Class 1A NICs paid in July always relate to the previous tax year.

These contributions typically apply to benefits provided to company directors, employees, individuals in controlling positions, and their family or household members.

Employers, don’t forget to pay Class 1A NIC

Employers must pay Class 1A NICs for 2024–25 benefits by 19 July (post) or 22 July (electronic). These apply to perks like company cars and private health cover—late payment risks penalties from HMRC.

Class 1A NICs are payable by employers on the value of most taxable benefits offered to employees and directors, including company cars and private medical insurance. They are also due on any portion of termination payments exceeding £30,000, provided that Class 1 NICs have not already been applied.

To ensure the payment is correctly allocated, employers should use their Accounts Office reference number as the payment reference and clearly indicate the relevant tax year and month. It is important to note that Class 1A NICs paid in July always relate to the previous tax year.

There are three key dates employers must remember for the 2024–25 Class 1A NICs. Forms P11D and P11D(b) must be submitted by 6 July 2025. Postal cheque payments must reach HMRC by 19 July 2025, and electronic payments must clear into HMRC’s bank account by 22 July 2025.

These contributions generally apply to benefits provided to company directors, employees, individuals in controlling positions, and their family or household members.

Deadline for paying Class 1A NIC

Employers must pay Class 1A NICs on 2024–25 benefits by 19 July (22 July if paying electronically). Avoid penalties by meeting deadlines and using correct references.

Employers are reminded of the upcoming Class 1A National Insurance contributions (NICs) deadline, which applies to most benefits in kind provided to employees during the 2024–25 tax year. These contributions must be paid by 19 July 2025 (or 22 July 2025 if paying electronically) to avoid penalties.

Class 1A NICs are payable by employers on the value of most taxable benefits provided to employees and directors, such as company cars and private medical insurance. They are also due on the portion of termination payments exceeding £30,000, where Class 1 NICs haven’t already been applied.

To ensure payment is correctly allocated, employers must use their Accounts Office reference number as the payment reference and indicate clearly which tax year and month the payment relates to. Note that Class 1A NICs paid in July will always relate to the previous tax year.

There are three key dates to keep in mind for 2024–25 Class 1A NICs:

• 6 July 2025 – Submission deadline for forms P11D and P11D(b) (‘Return of Class 1A National Insurance contributions due’)
• 19 July 2025 – Deadline for postal cheque payments to be received by HMRC
• 22 July 2025 – Deadline for electronic payments to clear into HMRC’s bank account

These contributions are typically due on benefits provided to:

• Company directors and those in controlling positions
• Employees
• Family members or household members of the above