Why you should check your NICs

NICs

Date

Dec 06, 2019

Categories

Personal Finance

Although you may be mindful of your tax code and how much tax you owe, many people are less aware of their National Insurance contributions (NICs).  However, it’s really important to check your NI contributions history, because it could help you avoid any nasty surprises when you reach state retirement age.

In 2015 HMRC changed the way it collected Class 2 NICs for the self employed.  Nowadays they are collected via self assessment rather than by direct collection, which in many cases   has resulted in HMRC incorrectly ceasing to demand contributions. So if you’re self employed, you need to register for both self assessment and self employment, because otherwise HMRC won’t automatically collect your Class 2 NICs.

There have also been many instances of contributions going missing for employees on PAYE.  If you’re employed then your employer has a responsibility to ensure that both you, and they, make sufficient NI payments on your behalf.  Nevertheless, employers can make mistakes, and you need to ensure that the correct NICs are being deducted.   Like income tax, NICs are linked to the amount you earn, and if you’re only making minimal contributions then you may find yourself with a shortfall which you’ll then need to make up.

 

What to do if you notice an error in your NICs

If you have a payroll department, this would be your first port of call to discuss your concerns and establish if an error has been made.   Make sure you have your NI number to hand, plus the relevant P60 and P45 forms covering the years in question.

Alternatively you can investigate the problem yourself by checking your employment history and your NI payment record using HMRC’s personal tax account service: https://www.gov.uk/check-national-insurance-record.    Check your online details against your payslips, and ensure that there are no discrepancies in your NI number or your contributions.  Make sure you haven’t made contributions that haven’t been credited to your account.

If you come across any inconsistencies, be sure to inform your employer and get in touch with HMRC.   They will probably want to see copies of your P60s and will review your records to establish how the error came about.  HMRC should also help advise you how to rectify the problem and ensure that it doesn’t happen again.

 

Plugging the gap

It’s important to establish how many years’ contributions you’ve made, so you can calculate what state pension you’ll be eligible to receive and you can plan for your retirement.   If you have any NI gaps, then it might be worth checking if any NI credits are available to make up the difference.   You could also consider making voluntary contributions.  You can usually only pay for gaps in your NI record for the past six years.

If you have any queries or concerns about your NI contribution history then please contact us and we’ll happily look into it for you.

 

 

Summary
Why you should check your NICs
Article Name
Why you should check your NICs
Description
Many people are unaware of their National Insurance contributions history, but it's important to check as it could help you avoid any nasty surprises when you reach state retirement age.
Author
Publisher Name
Paish Tooth
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