Most workers assume that their National Insurance Contributions (NICs), as reported by their employer or through their own records, are accurate and up to date.
After all, within the Income Tax system, we have the comfort of an annual reconciliation process, so why would NICs be any different?
However, it may come as a shock to learn that they aren’t and that this could have an impact on your ability to claim the full state pension.
Many have argued that HM Revenue & Customs have always held tax as a priority over NICS, with some pointing to the fact that NIC records are hidden behind the Personal Tax Account (PTA) portal, which includes no mention of National Insurance.
Many people will reach state pension age and suddenly realise there are gaps in their NIC record, which means that they may not be entitled to the state pension they were expecting.
This is why it is important that individuals check their own NI records every year and if needs be, make payments to cover any gaps that they may have.
Reasons for gaps could include the RTI data from your employer being incorrectly recorded or a period out of work.
Where you identify a gap in your records it is worth contacting HMRC to find out why the gap exists and how it can be rectified.
Remember, if you have been out of work and in receipt of certain state benefits you will get automatic NI credits to provide you with a qualifying year for NIC, where your earnings aren’t high enough for that year to otherwise qualify.
The state benefits that provide eligibility for NIC and which are relevant to employees are:
- employment and support allowance
- maternity allowance
- child benefit for a child under 12 since April 2010 (prior to April 2010 home responsibility protection could provide credits for children under 16)
- carer’s allowance or income support
- working tax credit with a disability premium so your earnings’ capacity is restricted
- universal credit.
Link: Personal Tax Account