Why the self-employed should protect their National Insurance record
If you are self-employed it’s vital to regularly check your National Insurance record to ensure your contributions have been recorded correctly, and that there are no unexplained gaps.
HMRC don’t run any checks on this element of National Insurance, so if you don’t keep an eye on your NI record yourself, it can mean you won’t receive the correct amount of state pension when you reach retirement age.
Clearly, this could negatively affect your plans for retirement, and potentially create financial hardship, so how do you check your National Insurance record to make sure it’s correct?
How to check your NI record
You can check your NI contributions online by looking at your personal tax account, making sure all your contributions have been recorded and that there are no unexpected gaps. You can also view any NI credits you’ve received, and find out whether you can pay voluntary contributions if necessary.
HMRC will also send a printed version of your National Insurance statement if you contact them by post or telephone and let them know the years that you want to view, although you won’t be able to see the current or previous years’ entries.
You currently need a total of 35 ‘qualifying years’ to receive the full state pension if you reach state pension age on or after April 2016. If you’ve missed any contributions or your record is incorrect and there are gaps you didn’t expect, you may need to query the matter with HMRC.
How to protect your National Insurance record when you’re self-employed
It’s important to query your NI record if you view the information and don’t have the number of qualifying years you were expecting. But there’s another issue that could be affecting the results.
In 2015, the payment system for self-employed Class 2 NI contributions changed from direct debit to collection through the self-assessment system, along with income tax and Class 4 National Insurance Contributions.
For this reason you may find that your NI record shows ‘Year is not full’ for some years from 2015 onwards. HMRC could be investigating the matter with the intention of updating your record, but by being proactive and contacting them first you can protect your National Insurance record and make sure it’s correct by the time you reach state pension age.
Getting professional help with your NI record
It’s reassuring to have the support and guidance of a qualified accountant when dealing with HMRC. They understand the system, and in this case can provide valuable insight into why your National Insurance record may not be correct.
Handpicked Accountants can help you find a reliable accountant in your area who will help you protect your NI record as a self-employed person, also providing expert advice on other areas of self-employment.
We will send you several recommendations for accountants in your locality, based on our well-established working relationships. Please contact one of our expert team to find out more about our network of finance professionals.