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Why make voluntary NIC contributions

Why make voluntary NIC contributions

In many circumstances it can be beneficial for taxpayers to make voluntary Class 2 National Insurance Contributions (NICs) to increase their entitlement to benefits, including the State or New State Pension if they are self-employed.

Taxpayers might want to consider making voluntary NICs because:

  • They are close to State Pension age and do not have enough qualifying years to get the full State Pension
  • They know they will not be able to get the qualifying years they need to qualify for the full State Pension during their working life
  • They are self-employed and do not have to pay Class 2 contributions because they have low profits or live outside the UK, but want to qualify for some benefits

There is also a specific list of jobs where Class 2 NICs are not payable. These are:

  • examiners, moderators, invigilators and people who set exam questions
  • people who run businesses involving land or property
  • ministers of religion who do not receive a salary or stipend
  • people who make investments for themselves or others – but not as a business and without getting a fee or commission

If you know any taxpayers that fall within any of these categories it may be beneficial to get a State Pension forecast and examine whether they should make voluntary Class 2 NICs to make up missing years.

Source: HM Revenue & Customs Tue, 11 Aug 2020 00:00:00 +0100

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