A state pension warning has been issued over the National Insurance hike.
Chancellor Rishi Sunak announced in this week’s spring statement that the threshold for National Insurance contributions would increase from £3,750 to £12,570 from July. The increase is one of the measures introduced in the wake of the UK’s cost of living crisis and means employees will keep more of what they earn before they have to start paying personal tax – like The Daily Record reports.
The Health and Social Care Tax also comes into force next month, representing a 1.25 percentage point increase on National Insurance contributions designed to support the NHS across the UK. Mr Sunak had been under pressure to drop the increase in the face of the growing cost of living crisis, but instead opted to soften the blow by raising the threshold at which people start paying National Insurance.
READ MORE: HMRC warns 7,000 benefit claimants could have their payments frozen in two weeks
However, a senior pensions and retirement analyst at Hargreaves Lansdown has issued a warning following the rise care must be taken to ensure that workers earning less than £12,570 a year do not lose access to credits national insurance vitals for their state pension. Helen Morrissey said: “The state pension is the backbone of most people’s retirement and therefore they need to ensure they don’t suffer unnecessary gaps which means that they end up with less in retirement.
“Many benefits come with automatic National Insurance credits. For example, Child Benefit, Universal Credit and Jobseeker’s Allowance will credit you automatically. Other benefits such as statutory sickness benefit will give you credits if you apply for them. It is therefore essential that people who fear that they will no longer receive credit checks from National Insurance see what benefits they are entitled to, so that these credits can be granted.
“Another option for people looking to fill gaps in their state pension record is to buy voluntary national insurance credits. Each missing year costs around £800 and will give you 1/35th of your entitlement. During retirement, they can be a great way to increase your state pension entitlement. »
Automatic National Insurance Credits
You should get automatic National Insurance credits if you receive the following benefits
- Universal Credit
- Job search allowance
- Employment and Support Allowance
- Maternity allowance
- Family allowances
- Carer’s allowance
- Income support
You may be able to claim National Insurance credits in these cases
- If you are unemployed and looking for work but are not applying for Jobseeker’s Allowance, you can contact your Jobcentre to apply for credit.
- If you are on statutory sick pay and not earning enough to do an NIC qualifying year, you can still apply. The same applies to statutory maternity, paternity or adoption benefits.
- If you look after one or more sick or disabled people for at least 20 hours a week and you are not applying for care allowance or income support.
- You are under the statutory retirement age and you are caring for a child under 12, you may qualify for the Childcare Credit for Specified Adults.
For more information and how to claim National Insurance Credits: Eligibility on the GOV.UK website here.
Receive newsletters with the latest news, sport and updates from ECHO Liverpool by signing up here
