The Lemon Fool

ursaminortaur wrote:They stopped you being able to pay by cheque because of COVID and I'm not sure whether they are allowing it again now.

Spot the difference:

3-Nov-2021: https://web.archive.org/web/20211103020252/https://www.gov.uk/pay-voluntary-class-3-national-insurance/by-post
Today: https://www.gov.uk/pay-voluntary-class-3-national-insurance/by-post

ursaminortaur wrote:
They stopped you being able to pay by cheque because of COVID and I'm not sure whether they are allowing it again now.
If not then ring them up and explain that you want to pay NICs for missed years and they should give you a reference number and details of the account to pay into which you can do through a bank transfer. (I found that ringing up as early as possible pretty much when they opened allowed me to get through without too much of a problem when I did this a couple of years ago - ringing later in the day would result in you waiting for ever).

Thanks for this update - really helpful. I thought I knew what was going on with my state pension (because I just paid attention to the minimum number of years of NI contribution required) so have been really surprised about just how much I didn't know.

I'm looking into my daughter making NI payments. Her statement says that she will have full pension at retirement but she does have some years with shortfalls. Would it be worthwhile paying these shortfall years as a hedge against the government of the day changing the rules.

The shortfalls seem to be during her further education years when she built up a small student loan. Seems to me some young adults will have a double whammy of significant student loan and NI shortfalls for those years which seems unfair.

scotview wrote:I'm looking into my daughter making NI payments. Her statement says that she will have full pension at retirement but she does have some years with shortfalls. Would it be worthwhile paying these shortfall years as a hedge against the government of the day changing the rules.

The shortfalls seem to be during her further education years when she built up a small student loan. Seems to me some young adults will have a double whammy of significant student loan and NI shortfalls for those years which seems unfair.

How old is she, does she have any 2006 to 2015 shortfalls, how many years does she have already?

scotview wrote:I'm looking into my daughter making NI payments. Her statement says that she will have full pension at retirement but she does have some years with shortfalls. Would it be worthwhile paying these shortfall years as a hedge against the government of the day changing the rules.

The shortfalls seem to be during her further education years when she built up a small student loan. Seems to me some young adults will have a double whammy of significant student loan and NI shortfalls for those years which seems unfair.

I wouldn't have thought so, unless she is very near to retirement. Who knows how many times they'll change the rules before she retires? When I started work I expected to get a pension at 60, then it went up to 65 then 67. The number of years required to get a full pension has changed at least twice and the system of contracting out has been scrapped completely (but leaving me short of a full pension). And there's no guarantee that you'll live to draw it anyway.

Just an additional question about this.
Won't the cost of filling the gaps in other years also go up on 5th April? So 2017/18, 2018/19 and 2019/20.

Below I've included your advice about doing the 2016/17 one and also the 2020/21.
(Did you suggest just these 2 because the 17/18, 18/19 and 19/20 costs of filling the NI gaps are fixed, and won't increase further?

It's just that the DWP website on gaps says for the earlier years "This shortfall may increase after 6 April 2023"

mc2fool wrote:
So, the question now is how best to make those contributions. The OP announcement notwithstanding I would recommend getting the 2016/17 NIC in ASAP, as with this last minute extension, well, I just think it'd be better to get it in before the original deadline, just to reduce the chances for cockups at their end.

And you should also get the 2020/21 one in before the 5th of April too, as class 3 voluntary NICs stay frozen in price for two years (at their original cost) and then go up to the current year's price. That means that up to this 5th of April the class 3 NIC for 2020/21 will cost you 52*£15.30 = £795.60 (ref) but as of the 6th of April will cost 52*£17.45 = £907.40 (ref).

Of course, you may want to just pay all of the 2016/17 to 2021/22 NICs in one go, but if you do decide to spread them out and keep earning a few % in your bank account in the interim, just remember that (a) you have 6 years to make up a year, (b) the cost goes up after 2 years and (c) the increase applied in the next tax year is by the prior September's CPI figure.

zico wrote:Just an additional question about this.
Won't the cost of filling the gaps in other years also go up on 5th April? So 2017/18, 2018/19 and 2019/20.

Below I've included your advice about doing the 2016/17 one and also the 2020/21.
(Did you suggest just these 2 because the 17/18, 18/19 and 19/20 costs of filling the NI gaps are fixed, and won't increase further?

Sorry, yes , they'll all go up, and no those aren't fixed. It's just that the 2020/21 one will go up more than the rest (% wise). I can see on rereading that I was far from clear about that, sorry.

The 2016/17 one you have to do 'cos the clock will soon run out on it.

As I said, class 3 voluntary NICs stay frozen in price for two years (at their original cost) and then go up to the current year's price, current being the year in which you pay them.

So, the 17/18, 18/19 and 19/20 ones will go up (on 6th of April) from this year's (2022/23) cost to next year's cost (2023/24). The 20/21 one will, OTOH, go up from the 2020/21 cost to the 2023/24 cost. The 2021/22 cost will stay at its original cost until 6-Apr-24.

Thanks for clarifying that. I'll phone DWP in the morning to see if I can pay them in one big go.
To be sure the payments get through, is it best to do them by phone, or should I send a cheque by recorded delivery for each individual year? (Or some other way).

(I could obviously print out my gaps from the DWP website, and send one cheque for the full amount, with an explanatory letter, but I just want to be sure my payments don't somehow get misinterpreted, or not credited, before April 6th.)
I have worked in government, and so don't underestimate the chances of something apparently simple all going wrong!

zico wrote:Thanks for clarifying that. I'll phone DWP in the morning to see if I can pay them in one big go.
To be sure the payments get through, is it best to do them by phone, or should I send a cheque by recorded delivery for each individual year? (Or some other way).

(I could obviously print out my gaps from the DWP website, and send one cheque for the full amount, with an explanatory letter, but I just want to be sure my payments don't somehow get misinterpreted, or not credited, before April 6th.)
I have worked in government, and so don't underestimate the chances of something apparently simple all going wrong!

Well, as I mentioned previously, I always used to do it by cheque, sometimes for more than one year at a go, and never with recorded delivery. However, that was some years ago, always in plenty of time before tax year end, and before cost (job) cutting in HMRC, covid, etc, etc.

But I think in your situation I'd try to put up with listening to muzak and "your call is important to us" or similar ....

I don't know why they don't allow payment online by debit card, they do for income tax after all. BTW, it's HMRC that deals with your NI record, NI payments, and indeed anything to do with it all before drawing your pension. DWP deals with paying your pension. HMRC, money in. DWP, money out.

Tried contacting DWP at 8am sharp, but just got options followed by engaged tone. Recorded message says deadline has been extended, but doesn't mention the cost of filling gaps goes up on April 6th.

Think I'll try paying by cheque and recorded delivery.

mc2fool wrote:

scotview wrote:How old is she, does she have any 2006 to 2015 shortfalls, how many years does she have already?

Thanks for the reply mc2.
My daughter is 35, as far as she could make out from her on line record, she has 13 full years and 6 part years beginning 2006 (Uni) which will cost about £2000 to fill. She's going to phone DWP to confirm the details and check how to pay.

My question is whether, at her age, it is worthwhile paying to fill those years, in case HMG increase the OAP requirements to say 40 years contributions, anything's possible.

zico wrote:Tried contacting DWP at 8am sharp, but just got options followed by engaged tone. Recorded message says deadline has been extended, but doesn't mention the cost of filling gaps goes up on April 6th.

Hmmm ... I certainly read it that the up to 2016/17 ones would not go up during the extension but for others....

The preamble to the ministerial statement in the OP talks about NICs for April 2006 to April 2016 and is then explicit about the extension of the deadline applying to years that would otherwise have been out of time to pay after 5 April, up to and including the 2016/17 tax year, but then goes on to say that All voluntary NICs payments will be accepted at the existing 2022/23 rates until the 31 July.

On an optimistic reading that "All" could mean any and all, even post 2016/17 ones, or on a pessimistic reading could mean only all covered by the extension. All of the articles in the press I've looked at just echo the ministerial statement and don't have any explicit clarification about the post 2016/17 years.

However ... stop press! I've found a response, from just yesterday, to exactly that query in the HMRC forums, and the answer is that all means all, even post 2016/17 ones! So, good news all round. HMRC's response contains a nice table detailing how much NICs will cost for which years up to when. https://community.hmrc.gov.uk/customerforums/pt/8f18e85a-7fbe-ed11-9ac4-00155d975688

scotview wrote:

mc2fool wrote:

scotview wrote:How old is she, does she have any 2006 to 2015 shortfalls, how many years does she have already?

Thanks for the reply mc2.
My daughter is 35, as far as she could make out from her on line record, she has 13 full years and 6 part years beginning 2006 (Uni) which will cost about £2000 to fill. She's going to phone DWP to confirm the details and check how to pay.

My question is whether, at her age, it is worthwhile paying to fill those years, in case HMG increase the OAP requirements to say 40 years contributions, anything's possible.

Well, as you say, anything's possible. However, under current legislation she'll reach state pension age at 68, so she has at least another 31 potential qualifying years in front of her (maybe up to 33, depending on when her birthday falls), and as she has 13 years already you're talking about insuring against a rise to over 44 qualifying years.

As you say, anything's possible. I suppose that even ignoring the possibility of legislative changes, there is an argument for filling those 6 part years anyway, just to get them under her belt, so to speak, so that she can get to 35 years* and stop involuntarily contributing, i.e. working, after 16 years* onwards.

But then of course she could just stop after 16 years anyway and make voluntary contributions going forward from there, so the question then becomes would it be cheaper then or now? Well, again under current legislation, the cost of NICs goes up by CPI each year, so that's what she'd have to beat if she invested that £2000 for the possibility of using it to cover future voluntary NICs.

However, there's a couple of other twists. Firstly, there's the class 2 "wheeze" (see posts earlier in thread) she could employ in future, although of course the govt may make that may disappear at some point. Secondly, £2000 to fill part 6 years is actually pretty cheap as to fill a full year it's £824.20. And in particular if the £2K isn't evenly needed, at £333 for each year, and there are some years that only need a few quid to fill then those might well be worth filling just for the heck of it.

* as I keep on saying, 35 years only actually applies to folks starting from 2016 onwards. The practical upshot is that she may need more or less than 35, and also filling pre-2016 years may not gain as much as post 2016 years. I can figure it out for her but I'll need from her pension forecast:

her "Estimate based on your National Insurance record up to 5 April 202X", the "X" and the £ amount
the number of years she has up to 5-Apr-2016
the number of years she has from 6-Apr-2016 onwards
her COPE (Contracted out Pension Equivalent) if she has one, it's in the lower part of the page

FYI, I called the International Caseworker Department this morning to follow up on a form CF83 (Application to pay National Insurance contributions abroad) that I submitted almost 4 months ago. I was told that they are currently processing forms received 33 weeks back, in September 2022. I will still be eligible to close gaps in my record that date back more than 6 years, even though there is not the slightest chance that they process my application before the extended July deadline.

I suggest this disproves the theory that delays all are due to people rushing in last minute applications and places the responsibility with HMRC. The good news is that the deadline seems to apply more to the application than the completed processing thereof.

Now extended to April 2025!

https://www.moneysavingexpert.com/savin ... ributions/

Scott.

swill453 wrote:Now extended to April 2025!

https://www.moneysavingexpert.com/savin ... ributions/

Scott.

From the article:

Decide how many NI years to buy. Do note that you don't need to buy all the NI years you want in one go (though you will need to buy any between 2006 and 2016 before 5 April 2025).

Although I can't find that reported anywhere else?

(Oh FFS!)

Official Ministerial statement at https://questions-statements.parliament.uk/written-statements/detail/2023-06-12/hcws843.

Note that: "This extension will also apply to contributions relating to all years which would reach their payment deadline before 5 April 2025, including tax years 2016 to 2017 and 2017 to 2018. All relevant voluntary National Insurance contributions (NICs) payments will be accepted at the rates applicable in 2022 to 2023 until 5 April 2025."

However, the potential downside is: "Furthermore, HMRC and DWP are taking the opportunity through the extension period to make improvements to the digital service, with the intention that ultimately the majority of customers should be able to complete the process online. Further announcements will follow in due course."

With the deadline now extended to April 2025 and the contribution rate fixed at the level of 2022/2023, why would anyone choose to make payments earlier? Am I missing something?

I finally received a response, eight months after submitting my application. I apparently fulfil the conditions for class 2 contributions for only 13 of the 17 missing years and must now contact the case worker again by post or phone to confirm that I wish to continue. They could have sent me payment instructions, but instead chose to drag out the process that little bit longer. Little wonder the backlog is so long.

I have now received payment instructions, a mere eleven months after submitting my application form CF83. Inspired by posts elsewhere on this forum, I challenged the original assessment and have won the right to make voluntary class 2 contributions for all the missing years, based on my activity managing a personal investment portfolio. That makes no sense whatsoever, but I'll happily take it with both hands.