The issue concerns some people who became self-employed but did not complete the specific CWF1 registration form, even if they were already registered for Self Assessment. HMRC said the problem has been resolved for people becoming self-employed from the 2024/25 tax year onwards.
HMRC Identifies National Insurance Record Issue Affecting Self-Employed Workers
According to HMRC, around 800,000 taxpayers may have National Insurance records affected by the issue, including approximately 160,000 people who are already at, or within two years of reaching, State Pension age. Those closest to retirement are being contacted first, with further letters expected over the coming months.
The problem relates mainly to Class 2 National Insurance contributions, which help self-employed people build qualifying years towards their State Pension. Some individuals who registered for Self Assessment when starting self-employment did not separately notify HMRC using form CWF1. As a result, HMRC’s National Insurance system may not have recognised that Class 2 contributions were due.
Other gaps may also have occurred where Class 2 contributions were paid after the 31 January deadline, or where payments were initially used to settle outstanding tax liabilities rather than National Insurance contributions.
The letters being sent by HMRC are not demands for payment. They are intended to inform affected taxpayers that they may be able to review their records and fill missing qualifying years. According to HMRC, people affected by this specific issue will be allowed to make voluntary contributions for years dating back to 2015/16, beyond the usual six-year limit.
Taxpayers Advised to Check Records before Making Voluntary Payments
Receiving a letter does not automatically mean that an individual has a State Pension shortfall. The first step is to check whether additional qualifying years are needed, as some people may already have enough years from employment or previous periods of self-employment.
Taxpayers can review their National Insurance history and State Pension forecast through their Personal Tax Account. The service shows how much State Pension they could receive, when they may receive it, and whether filling gaps could increase their entitlement.
HMRC has advised people not to contact the department about the issue before receiving guidance or attempt to complete the CWF1 form retrospectively, as this could interfere with the process of correcting affected records.
According to MoneySavingExpert, HMRC has also recommended that people wait to be contacted directly rather than taking action themselves. An updated version of the State Pension forecast tool is expected to allow affected self-employed people to identify relevant gaps and make voluntary contributions.
For some taxpayers, paying voluntary Class 2 National Insurance contributions may help secure additional qualifying years if those years would increase their State Pension entitlement. Before making any payment, individuals are advised to check whether filling the gaps would provide a benefit.
