According to the Chartered Institute of Taxation (CIOT), HMRC and the Department for Work and Pensions (DWP) are sending letters to certain taxpayers who became self-employed between 2015 and early 2024 regarding failure to register self-employed status for National Insurance contribution (NIC) purposes.
Since 2015, taxpayers who became self-employed have been required to register their self-employed status with HMRC by completing a CWF1 form to ensure they’re correctly registered. The confusing part of this process is that this is required even if taxpayers have completed the self-employed section of the self-assessment return stating that they have commenced. Without completing a CWF1 form, the change in status won’t have been noted for NICs purposes.
Such taxpayers who did not complete a CWF1 to register their self-employment may not have paid enough Class 2 NICs and, as a result, may have gaps in their NI record which could affect their State Pension entitlement.
HMRC states that this issue has now been resolved and HMRC is not actively seeking to collect any NICs not paid in those years. However, HMRC and the DWP are giving taxpayers the opportunity to make additional NICs ‘top up payments’ if they wish to do so.
HMRC thinks that approximately 800,000 customers may have gaps in their NICs history because of this issue. Based on current HMRC data, it’s estimated around 160,000 customers aged above, or within two years of, State Pension age may be affected. It is these taxpayers who are set to receive a letter.
For affected taxpayers not within two years of the State Pension age, HMRC is upgrading the ‘Check Your State Pension Forecast’ tool so that, from Spring 2027, self-employed people can use it to identify gaps themselves and make voluntary contributions.