The UK tax authority (HMRC) has confirmed that the deadline has now been extended to the 5th April 2025
If you live in Ireland but have spent time working in the UK, you might be missing out on some valuable National Insurance Contributions which could increase your UK State Pension entitlement in retirement.
Who can avail of this opportunity?
In order to qualify for a full UK state pension, you must have paid National Insurance Contributions for 35 years. However, if you have less than 35 but more than 10 years National Insurance Contributions, you could be entitled to a partial UK state pension if one or more of the following apply to you;
- You were working and paid National Insurance contributions
- You were getting National Insurance credits
- You were paying voluntary National Insurance contributions
If you have gaps in your National Insurance Record (NIR) between April 2006 and April 2016 and do not meet the ten-year qualifying requirement you can ‘buy back’ these years to be eligible for a partial UK State Pension. ‘Buy back’ refers to making voluntary contributions for any years you were not working in the UK.
If you have already met the ten-year qualifying requirement and have gaps in your National Insurance Record (NIR) between April 2006 and April 2016, you can ‘buy back’ these years to enhance your UK State Pension entitlement.
It’s important to note this is a once-off opportunity which will expire after the 5th April 2025. After this date you will only be able to buy back voluntary contributions from April 2016 onwards .
For example, if you left the UK before April 2006, you could potentially purchase 17 years now before 5th April 2025 which is the extended deadline by HMRC. However, if you waited to buy back years on the 6th April 2025 after the deadline has passed, you would only be able to buy back years from April 2016 onwards.
For anyone who is unsure of the exact gaps in their National Insurance Record, HMRC have an online portal where you can check this as well as requesting a state pension forecast. A forecast allows you to see your projected state pension entitlement based on your paid contributions. This and further information can be found on www.gov.uk.
How much does it cost to buy back years?
The voluntary National Insurance contribution rates for the 2022 to 2023 tax year are as follows and each year purchased will increase your State Pension entitlement by £275 per annum
- £3.15 per week or £163.80 per annum for Class 2 contributions.
- £15.85 per week or £824.20 per annum for Class 3 contributions.
Class 2 contributions apply to anyone living abroad and working abroad, but only if you worked in the UK immediately before leaving, and you’ve previously lived in the UK for at least 3 years in a row or paid at least 3 years of contributions.
Class 3 contributions apply to anyone living abroad and not working, but only if at some point you’ve lived in the UK for at least 3 years in a row or paid at least 3 years of contributions.
Example: If you purchase one year of Class 3 contributions for £824.20 your state pension entitlement will increase by £275 p.a.
For most people, the breakeven point will likely be six years due to higher tax rates. It is important to note the cost of buying back years is paid from personal funds however the state pension will be taxed.
How do I apply to buy back years?
In order to avail of the option to buy back years, you will need to complete the Application to pay National Insurance contributions abroad form (CF83 – Application to pay National Insurance contributions abroad (publishing.service.gov.uk) and return this to HMRC directly. All details are available on www.gov.uk and the return address is outlined on the application form.
While this opportunity appears to be good value for money, it is important to first review your National Insurance Record and current State Pension forecast with HMRC on www.gov.uk to see if you are eligible to buy back years or if you are already forecast to receive a full State Pension.