An HMRC error could cause some low-income, self-employed workers to lose their entitlement to National Insurance-related benefits, including the state pension, warns the Low Incomes Tax Reform Group (LITRG). The issue involves the payment of voluntary Class 2 National Insurance contributions (NICs) by self-employed individuals with profits under £6,725.
These voluntary contributions are typically made as part of the self-assessment return and must be received by HMRC by 31 January following the end of the tax year. HMRC then transfers the NICs to the taxpayer’s National Insurance record to count towards benefit entitlements.
However, it seems that HMRC delayed this transfer until after the 31 January deadline for the 2022/23 tax year, resulting in the rejection and automatic refund of these voluntary contributions. Without intervention, this could cause taxpayers to miss a qualifying year of NICs.
Antonia Stokes, LITRG Technical Officer, said:
‘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.
‘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.’
