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An HMRC error could mean that some low-income, self-employed workers lose out on their National Insurance-related benefits, The Low Incomes Tax Reform Group (LITRG) has warned.
The issue centres around the payment of voluntary Class 2 National Insurance contributions (NICs) that can be made by self-employed taxpayers with profits under £6,725.
These voluntary contributions are usually paid by taxpayers as part of their self assessment return and must reach HMRC by 31 January following the end of the tax year.
HMRC then automatically transfers the NICs to the taxpayer’s National Insurance record to be counted towards their entitlement to benefits such as the state pension and other employment, maternity and bereavement benefits.
However, it appears this year that HMRC did not initiate the transfer until after the 31 January deadline. In some cases, this resulted in the voluntary contributions of up to £163.803 being rejected and refunded automatically to affected taxpayers.
In the absence of any action, this could mean that taxpayers miss out on a qualifying year of National Insurance contributions.
As a result, the LITRG is calling on HMRC to identify and contact those affected to make them aware of the issue and arrange for the voluntary Class 2 NICs to be paid and properly reflected on their National Insurance record.
Antonia Stokes, technical officer of the LITRG, said: “This appears to be an unfortunate error by HMRC that may impact certain low-income self-employed workers who have tried to keep their entitlement to National Insurance-related benefits up to date in the 2022/23 tax year.
“The issue is unique to the year in question, and our advice to those who might be affected is to first check to see whether they have received a refund from HMRC.”
She added: “We would also like to see HMRC acknowledge the error and proactively offer help to those taxpayers who have been affected, in line with HMRC’s own charter commitments. However, until they do so, there are practical steps that taxpayers can take to maintain their entitlement to National Insurance related benefits.”
