Look after your National Insurance Contributions record : No one else will
With the income tax system, we have the comfort of an annual reconciliation process. Most taxpayers believe that their national insurance contributions (NIC) record gets the same attention from HMRC, but it doesn’t.
I recall Ruth Owen, director general of personal tax for HMRC, told the Public Accounts Committee when real time information (RTI) was introduced that there was no need to reconcile NICs annually as HMRC “had 40 years to do that”.
The lack of priority given to NICs is indicated up by the fact that your NIC record is hidden behind the Personal Tax Account (PTA) portal – no mention of NI in the title.
Too often I hear cases of individuals reaching state pension age and suddenly finding there are gaps in their NIC record, so they don’t receive the state pension they were expecting. As tax professionals, we need to encourage people to own their NI data and check it every year.
Spot the gaps
If on checking your NIC record there is a gap that doesn’t look right, how do you start to correct it?
Perhaps the RTI data from your employer hasn’t been correctly recorded. You can see all the FPSs that HMRC has received in the PAYE pages of the PTA. Are all the payments you received there?
Does the total of NIC at the bottom of the page equal the totals on your P60 for the year? If not and it’s later than the September after tax year end, it’s worth getting in touch with HMRC to find out what has gone wrong with the data.
This is particularly important if there have been any corrections to your data: for example after a payroll merger, TUPE transfer, change of software or a new payroll agent.
We know that although HMRC correct tax records where duplicate employee records are created, NI can be an afterthought unless it is prompted to act.
If you are 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 pertinent 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.