It’s important to understand the NIC (National Insurance Contributions) and whether or not you should put in more. Ultimately, this is a decision you must make yourself, and working with the best accountant Epsom offers can be beneficial. Let’s dive in!
Types of NICs
There are four different classes for NICs, including:
- Class 1 – These are paid by the employees and employers.
- Class 2 – These are fixed weekly amounts that self-employed people pay.
- Class 3 – These are voluntary NICs that people pay to fill gaps in a contributions record.
- Class 4 – Self-employed people pay these on a portion of the profits.
What to Consider Before Making Voluntary Contributions
Though voluntary contributions can be beneficial, they won’t always increase a person’s State Pension. Likewise, there are no refunds, so it’s wise to ensure you’ll benefit.
You must have 35 qualifying years (at least) to receive your full State Pension. This number drops to 30 years if you reached your State Pension age before 2016. Therefore, a gap doesn’t always mean you won’t get your full amount.
Before making voluntary contributions, consider these things:
- Claiming Pension Credits often reduces the Pension Credit award, so you might not be better off.
- You won’t get a State Pension if you die before reaching the State Pension Age.
- You may not get the benefits of a higher State Pension if you’re in poor health or don’t expect to live long because it takes a few years to break even on those initial payments.
It’s wise to work with the best accountant Epsom offers before you make voluntary contributions. Contact David Beckman & Co Ltd for assistance today.
