An HMRC error could mean that some low-income, self-employed workers lose out on
their entitlement to National Insurance-related benefits like the state pension,
warns the Low Incomes Tax Reform Group (LITRG).
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.
However, it appears that HMRC did not initiate the transfer until after the 31
January deadline for the 2022/23 tax year resulting in the voluntary
contributions being rejected and automatically refunded to the taxpayer.
In the absence of any action, this could mean that taxpayers 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.'
Internet link: LITRG