UK National Insurance Top Up’s:
The 5th April 2025 deadline to Boost Your UK State Pension from Anywhere.
If you’re living overseas, you can still receive your UK state pension, no matter where you retire.
Therefore, for most people, it is worth making sure they are entitled to the full amount.
Here’s what you need to know about filling gaps in your National Insurance (NI) record to be eligible for the full state pension.
Why Fill Gaps?
- Boost Pension: Voluntary contributions can be as low as £194 for each missing year, however they can increase your state pension significantly.
- Deadline Extended: You can now fill gaps going back to the 2006-07 tax year but only until 5 April 2025.
- Eligibility: Under the new state pension system, you need 35 qualifying years to receive the full amount and you need at least 10 qualifying years to receive any state pension.
How It Works
- Pro Rata Payments: If you don’t have 35 years, you’ll receive a reduced pension proportional to the number of years you paid in.
- Cost vs. Benefit: Paying for missing years now could pay off in the long run—potentially thousands over your retirement as it boosts your pension for every year of retirement.
Contribution Details
- Class 2 or 3 Contributions: Most people living abroad qualify to make voluntary Class 2 or Class 3 contributions.
To pay Class 2 or Class 3 voluntary contributions you must have either:
- previously lived in the UK for 3 years in a row
- paid contributions or had Class 2 contributions treated as having been paid for at least 3 years
To pay Class 2 voluntary contributions both of the following must also apply:
- you worked in the UK immediately before leaving
- you’re currently working abroad (or you worked while you were abroad)
Potential Returns: Filling 10 years of Class 2 contributions could cost approximately £1,940. This could provide an annual increase of £3,286, inflation adjusted, for each year of retirement.
Though, of course, a lot depends on what happens to the UK’s state pension system in future years.
Checking Your Record
- Online Forecast: Visit gov.uk/check-state-pension to see your contribution status.
- Filling Gaps: You can identify which years to pay for and make secure payments online.
Important Considerations
- Younger People: If you’re younger, you may prefer to naturally build your NI record without buying extra years.
- Tax Implications: Increasing your pension could push you into a higher tax bracket. Consult a financial adviser for advice.
Steps to Make Contributions
- Check Your NI Record: Use the Government Gateway to see how many contributions you have.
- Decide on Contributions: Discuss with a financial adviser whether filling gaps is right for you.
- Complete Form CF83: Send this form (at the end of leaflet N183) to HMRC to make contributions.
Final Thoughts
- Deadline Reminder: Don’t miss the 5 April 2025 deadline to fill gaps from before 2017.
- Contact HMRC: Reach out to the HMRC Future Pensions Centre for confirmation on your entitlements and contributions.
By taking action now, you can secure a better financial future, even from abroad.
Contact us at Oreana Private Wealth, and our team of seasoned professionals ensuring you are maximising all the opportunities like this one that are available to you.
Disclaimer:
No representation, warranty (express or implied) is given or made as to its accuracy, reliability or to the completeness of the information presented in this article, which is drawn from public information and may contain material provided by third parties derived from sources believed to be accurate as at the issue date. The information contained in this article is current as at the date of publication but is subject to change without notice. While all care has been taken in the preparation of this article, Oreana assumes no obligation to update this article following publication.