If you are looking forward to retirement, it’s a good idea to check out how much state pension you will get. You can do this by logging on to your personal tax account on gov.uk, which contains lots of useful information about how much tax you owe and about your National Insurance Contributions (NICs) record, among other things.
To receive the full amount of the state pension, your NICs record needs to contain 35 completed years. You need at least ten complete NICs years to receive any amount of the UK state retirement pension.
You can plug gaps in your NICs record by paying voluntary Class 3 NICs. This payment generally needs to be made within six years of the gap year. Self-employed traders who don’t have to pay Class 2 NICs because their profits are below £6,725 can choose to pay Class 2 voluntarily instead of Class 3; paying Class 2 NICs will be cheaper. For 2022/23, where profits are between £6,725 and £11,908, no Class 2 NICs are payable, but the trader still gets a NICs credit.
You may also qualify for NICs credits for some years if you were claiming state benefits, Child Benefit or were a foster carer. The NICs credits were not always applied automatically, so it’s worth checking your own NICs record in your personal tax account.
If you have already paid enough NICs to get the full state pension, you may consider taking any further funds from your company as dividends, rent, or as contributions to a private pension.