Aged 40 to 73? Urgently consider buying national insurance years

If you're self-employed and have profits over £11,908 a year, you have to pay two types of national insurance: class 2 and class 4. Class 2 national insurance goes towards your state pension.

If your annual profit is between £6,725 and £11,908, you automatically build up entitlement to benefits (including state pension). If you earn less than £6,725, you don't, so you may want to consider paying voluntary contributions to top up.

Be aware that examiners and moderators are also treated as self-employed earners (visit Gov.uk for more info), so if you've done things like exam invigilating in the past, you could potentially save a lot of money on your NI contributions.

That's because Class 2 NI is currently £3.45 a week – which is a much lower rate than employees' NI. So it would cost you about £180 to buy one year's worth of class 2 NI contributions.

As with class 3 contributions, one qualifying year of NI adds about £328 a year (or £6.30 a week) to your state pension. So topping up is likely to be a no-brainer for many – paying less than £180 now to buy one year of NI gives you £328 a year back in state pension for the rest of your life.

Bear in mind that once you reach state pension age, you'll have to pay the higher rate for voluntary contributions (currently £824.20 for one year), so if you're eligible to buy class 2 contributions, it's worth checking NOW if making voluntary contributions is beneficial for you. But make sure you contact the Future Pension Centre first to get tailored advice.

Making class 2 voluntary contributions

If you file a self-assessment tax return, and your profits are less than £6,725, you'll be able to pay voluntary class 2 contributions as part of your next tax return.

If you don't file a self-assessment tax return, but qualify for class 2 contributions, you can make them by:

- Setting up a monthly direct debit (note this is only available for the current tax year, not for plugging historic gaps).
- Approving a payment with your online or app banking.
- Sending a payment through your bank or building society online or at a branch (you'll need to get an 18-digit reference number from HM Revenue & Customs).
- Posting a cheque to HM Revenue & Customs (HMRC).

If you live abroad, you need to read and complete form CF83 (found at the end of leaflet NI83) and send it back to HMRC using the address on the form. If you're enquiring about gaps for past periods, you'll need to contact HMRC for more information.

If you're a director of a limited company, you're still classed as an employee

Directors of limited companies are considered employees, rather than self-employed, and are required to pay class 1 national insurance on annual income from salary and bonuses over £12,570.

Contributions are worked out from their annual earnings rather than from what they earn in each pay period. Voluntary contributions are charged at the higher class 3 rate.

For most people, the answer is probably not, as you have plenty of time left to max your state pension entitlement by earning qualifying years automatically. Any money you spend plugging NI gaps now could prove to be a waste if it turns out you'd have had enough qualifying years to get a full state pension anyway.

However, you may decide it's worth the risk if you've lots of gaps in your NI record, particularly if they're partial gaps, as these can be very cheap to fill.

When you check your NI record, it'll show any gap years in chronological order. For every gap year, there'll be a 'more details' header where you'll be able to see the size of your shortfall and how much it'll cost to fill. In some cases, to get a full qualifying year you might only have to buy one or two weeks' worth of contributions, which would only cost between £15 and £30.

If you can afford to do this – and as long as you understand that spending this money may not boost your state pension entitlement beyond the max when you reach state pension age – it may be something you want to consider for the extra peace of mind.

That's especially true if you have gaps in your record between 2006 and 2016, as you can only plug these gaps until 5 April 2025. After this, you'll still be able to plug gaps, but only for the last six years.

The example below shows when it might make sense for a young person to top up a partial year:

Hannah, 35, spent her 20s and early 30s studying and working abroad. After checking her NI record, she found she has no full qualifying years.

Last tax year, she earned £0 in the first week of the year and then took a job as a part-time tutor, earning £123 per week for the remaining 51 weeks of the year. For this to count as a full qualifying year, she needed to earn at least £6,396 a year, with only weeks where she earned at least £123 counting towards this total.

Her NI record shows that she needs to buy one week of voluntary class 3 national insurance contributions for this year to become a 'full qualifying year'. The cost of one week for the 2021/22 tax year is £15.40.

If you claim Universal Credit, you are entitled to automatic national insurance credits for the duration of your claim. However, there have been many reports of MoneySavers telling us that when they check their national insurance record, these automatic credits are missing.

We're aware of technical issues with the transfer of data between the DWP and HMRC. And the DWP has assured us that the department is working on an improved process to add historic and future credits to claimants' records.

If you currently claim, or have claimed Universal Credit at any point, you need to check your national insurance record on Gov.uk and see if you're missing any credits. If you are, don't panic.

The DWP says that once the issue is resolved, claimants' records will be corrected.

HMRC is advising claimants to wait until Universal Credit credits are showing on their record before making any voluntary payments needed to make that a qualifying year. If any payments are made unnecessarily, they can be refunded.