Personal finance Voluntary Class 3 NICs: a path to financial security

Aaron Powis BSc (Hons), BFP, FCA, CTA is a Partner at D.R.E. & Co. Chartered Accountants and Chartered Tax Advisers in Ludlow

Ina move to bolster individual financial security, the government has announced the extension of the deadline for Voluntary Class 3 National Insurance Contributions (NICs) to April 2025. This grants eligible individuals an invaluable opportunity to fortify their state pension and enhance their retirement prospects. The decision to prolong the deadline comes as a response to ever-increasing concern about retirement provisions in an evolving economic landscape.

Class 3 NICs pertain to voluntary contributions that individuals can make to bridge any gaps in their National Insurance record. It is a vital option for those who might have missed qualifying contributions, such as self-employed individuals or those with career breaks. Prior to the extension, the deadline was set to close in the current tax year, prompting concerns among many unable to meet the cut-off.

For many individuals who were unable to meet the previous deadline due to various reasons, the decision is a welcome relief. It allows them to reassess their financial situation and make informed

By RJ TURNER

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About the Author

R J Turner is a Shropshire lad, born and brought up in Bridgnorth. He is fascinated by local history and loves to walk his dog in the local countryside around Oswestry, where he now lives. He is the author of two other crime novels, set in Shropshire: A Perfect Alibi and Murder On The Moss

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Living in rural Billsborough County, a young robin called Raymond and his best friend Bonnie, a blue tit, get into all sorts of adventures but they stick together and lean on each other’s strengths

Ideal for young readers aged seven to nine, ‘Adventures with Raymond ad Bonnie: The Deserted Cottage’ is illustrated in colour and is available to order through all good retailers and to preview and order at Amazon.co.uk or decisions about voluntary contributions. Whether someone is seeking to maximise their state pension entitlements or simply wants to secure a comfortable retirement, this extension offers a chance to act strategically and take control of their financial future. https://johnwilliamsauthor.co.uk

One of the key advantages of voluntary Class 3 NICs lies in the flexibility it offers in bridging gaps within an individual’s National Insurance record. It enables contributors to build a solid foundation for their state pension, which can serve as a vital supplement to personal savings and private pension schemes. By taking advantage of this extension, individuals can potentially reduce their reliance on means-tested benefits during retirement and enjoy a more stable financial position.

Moreover, the extended deadline aligns with the government’s commitment to promoting financial literacy and awareness. It provides ample time for individuals to seek expert advice, understand their pension entitlements and make informed choices.

If you need advice or assistance to resolve any issues regarding National Insurance please contact us at ludlow@dre.co.uk or by calling our office on 01584 875 715 and we will be happy to help.

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There are some significant differences between pensions and ISAs (or Individual Savings Accounts). Pensions are designed for retirement savings while money held in ISAs can be used for anything. You get generous tax relief when you pay into a pension but pay income tax when you withdraw money out of it, apart from the tax-free lump sum (usually 25 percent); no tax is payable when you withdraw money from an ISA. And ISAs usually give you immediate access to your money, while money in a pension is normally only available when you turn 55 (rising to 57 in 2028).

A standout feature of both is the tax-free growth on your money. You do not pay any tax, including dividend tax or capital gains tax, on investments held in a pension or ISA.

It’s important to remember that ISA and pension tax rates, reliefs and allowances depend on your circumstances and can change without notice. The value of your investment may go down as well as up, and you may get back less than originally invested.

Saving for retirement

If you have time on your side to save for retirement, you can end up with more savings from your pension than your ISA, thanks to the combined powers of tax relief and compounding. Employer contributions can boost your pension savings even more.

But saving for retirement doesn’t have to be a pension vs ISA situation. Many people invest in both. In fact, one of the common themes of successful retirement planning is making the most of your tax allowances and investing in a tax-efficient way. ISAs and pensions are both excellent options for this. This advice was provided by Hartey Wealth Management Limited. Registered