Retiring soon? Check your entitlement to the State Pension now!

Retiring soon? Check your entitlement to the State Pension now!

If you are planning to claim the UK state pension you should check your national insurance (NI) record before 5 April 2023. At present, voluntary contributions can be made to plug gaps back to April 2006, but this will be curtailed from April.

National insurance (NI) contributions are made by employed and self-employed
individuals based on their earnings. To qualify for the maximum ‘new state pension’
(received by those retiring on or after 6 April 2016) a person must have 35 qualifying
years of NI contributions. For part payment of the ‘new state pension’ a person must
have contributed for at least 10 years. For those whose NI record started before 6
April 2016, different rules may apply; the number of required years of NI
contributions/credits to obtain the full state pension may be higher.

If a person has not contributed enough before reaching state pension age, they may
not be able to claim state pension, or receive the full state pension amount.

To help protect state pensions and other benefits it may be beneficial for people to
make voluntary NI contributions to top up their contribution history, potentially
increasing the amount of state pension they will receive. We recommend you take
financial advice when making that decision as, amongst other factors, it requires
predicting what contributions will be made before state retirement.

Normally, it is only possible to make voluntary contributions for the past six tax years.
Currently there is an extension in place. Individuals can fill gaps in their NIC history
from 6 April 2006 to the present date by making voluntary contributions.

From 6 April 2023, the timeframe for making voluntary contributions will revert to the
normal six years. This means that in the 2023/24 tax year, it will be possible to make
contributions going back to the 2017/18 tax year only.

See: Check your national insurance record before 5 April 2023 | ICAEW

Pre-April tax planning reminder

Pre-April tax planning reminder

The new tax year starts 6 April 2023, so you have a couple of months to consider your options, once we pass this date the majority of the tax planning options for Income Tax and Capital Gains Tax purposes will cease unless actioned before the 6 April.

Do you fall into any of these categories?
  • You have or are thinking about a change in your personal status (single, married, separating, joining or dissolving a civil partnership).
  • You are thinking about selling a capital asset, such as shares or a property. From 6 April 2023 the Capital Gains Tax annual exempt amount reduces from £12,300 to £6,000.
  • You or your child’s other parent claims Child Benefit and the income of either parent is likely to exceed £50,000 for the first time during tax year 2022-23;
  • Your annual income is approaching or above £100,000;
  • You have not yet topped up your pension contributions for tax year 2022-23;
  • You are self-employed with a 31 March 2023 year-end;
  • You are self-employed and are thinking about the purchase of equipment or vehicles; or
  • You are the director and/or shareholder of a limited company and have not yet considered voting final dividends or bonuses for 2022-23.

If you do we can help you discuss your options ahead of the 6 April deadline!

The above list is not comprehensive, and at James Anderson + Co we specialise in helping clients with all taxes including PAYE, NIC, VAT, Corporation, Capital Gains, Income and Inheritance tax. Please get in touch through our contact page, or give us a call on 0131 440 1373, we’d be happy to help!