The introduction of the New State Pension – applicable to anyone under the state pension age on 6 April 2016 – has seen rules tighten. Now, an individual is required to pay into the system for 35 years to receive a full State Pension and 10 years to receive any State Pension at all (as opposed to just one year under the previous rules).
There is therefore a very real risk that parents could lose out on the State Pension if they miss any NI payments, perhaps during years that they are caring for young children, warns accounts senior Adam Sealey.
“For parents who are looking after a child under 12 NI credits are automatically linked to Child Benefit payments. However, for those who are subject to the High-Income Child Benefit Tax Charge and have opted out of receiving Child Benefit payments, NI credits aren’t automatically applied,” he says.
Ultimately, this could mean many farming families end up receiving a lowered State Pension or may miss out on one altogether due insufficient years of credits. To avoid this, it’s important to complete a simple form on the government website, informing the tax office that the parent is entitled to receive Child Benefit but cannot due to the High Income Child Benefit Tax charge. By doing so, State Pension credits can still accrue.
“Nobody likes additional paperwork,” says Mr Sealey. “However, given that each year of credit gained is worth over £230 per annum in State Pension, it’s worth farming families reviewing their own situation and taking professional advice.”
For more information contact Adam Sealey on 01749 335095.