National Insurance – to pay or not to pay?

We don’t know what we don’t know. This is particularly true of mission as there’s a lot to learn; be it a new language, a new culture, or how to raise support. There’s also tax and National Insurance to consider which, although important, are probably not as exciting as the work we’re doing. For many, it can feel overwhelming and beyond our understanding, so we put our head in the sand.

When I served with Food for the Hungry in Bolivia, I was blessed to go with an organisation who knew what they were doing in terms of tax and NI, something I was ignorant about. I don’t remember the details about NI, I just did what Food for the Hungry told me to do and didn’t think much more about it. It was only several years later when I was no longer serving with Food for the Hungry that the subject of NI cropped up and I realised that I should pay attention to it and that it was time-critical.

I discovered that NI contributions qualify you for certain benefits, and that you must have a certain number of qualifying years to receive the full State Pension. I suddenly needed to know if I'd been paying NI when I was in Bolivia. How many years had I contributed while employed in the UK prior to that? How many more qualifying years would I need to receive the full State Pension, and did I have enough years left to pay it?

How do I check my NI contributions?

Thankfully, it's straightforward to check the NI contributions you have made here. You can also check your State Pension forecast to see the amount you would receive based on the contributions you have made, and the forecast amount you would receive if you continue paying your contributions.

I breathed a sigh of relief on discovering that Food for the Hungry had ensured I paid what was then known as Voluntary Development Worker National Insurance contributions during my years in Bolivia. There was no gap in my NI record, and I had plenty of years left to reach the current 35 years of contributions required for the full State Pension. 

Paying those contributions was voluntary as I wasn’t employed, so I would have had the option to not pay NI for those years. Whether or not to pay would depend on whether I thought I would have enough to pay for my NI in future years; but you never know what is going to happen in the future, so it’s a personal choice. 

Don't leave it too late

At Stewardship we've heard of individuals in ministry or mission who didn’t realise they could have been paying NI contributions until they had less then 35 years left to contribute, leaving them with a very small level of State Pension and financial difficulties upon reaching pension age.

It is important to consider it as soon as possible. The class you pay depends on your employment status and how much you earn. If you’re employed in your role in the UK, it’s easy! NI will be taken from your salary before it hits your bank account. But if you receive support to carry out your Christian work, you are likely classed as ‘self-employed’ for tax purposes and therefore required to pay Class 2 and Class 4 NI on support income over a certain amount. Find out about Class 2 NI for 2022/23 in this Gov.uk youtube video (or search for the current year if after 2022/23).

When completing your Self Assessment tax return, the form will work out this calculation for you. If the amount you received in support and other taxable income in any given year was under the required amount to pay Class 2 NI, you can choose to pay voluntary contributions for that year to qualify towards your State Pension and other benefits. You can also pay contributions for a certain number of years prior to fill any gaps in your NI record should you choose to. If you are unsure, we recommend seeking advice from a financial advisor.

Disclaimer: Stewardship may provide general guidance about charitable giving for information purposes only. We do not offer tax, legal or investment advice and you are encouraged to seek advice from a qualified professional on your specific situation.