Many self-employed workers approaching retirement have National Insurance gaps on their record which could impact their state pension entitlement, according to HMRC
Hundreds of thousands of Britons have been given a state pension warning by HM Revenue and Customs (HMRC), who are at risk of losing their retirement entitlement.
The tax authority has uncovered a National Insurance Contributions gap that could affect as many as 800,000 self-employed taxpayers across the UK, potentially reducing the amount they claim from the state pension.
The issue concerns individuals who started working for themselves between 2015 and early March 2024 but did not notify the tax authority by filling in form CWF1.
Even those who registered for self-assessment may not have made sufficient Class 2 NIC payments if they failed to complete this specific form.
The tax authority is now preparing to contact those potentially impacted, warning that the shortfall could have a significant effect on the pension payments they ultimately receive.
Around 160,000 of those affected are already at or approaching state pension age, making the matter particularly urgent for this group.
HMRC will begin its outreach by writing to those who are within two years of reaching state pension age, prioritising the most time-sensitive cases first.
All correspondence to affected taxpayers is expected to be dispatched by summer 2027.
Alongside the letter campaign, the department intends to enhance its online "check your state pension forecast" tool, enabling individuals to spot any missing NIC years in their record.
Once upgraded, the tool will also allow taxpayers to arrange voluntary contributions to fill those gaps.
Ordinarily, voluntary NIC payments can only be backdated six years, but HMRC has confirmed that those caught up in this particular issue will be permitted to make contributions stretching as far back as the 2015/16 tax year.
For the current 2026/27 tax year, voluntary Class 2 contributions cost £3.65 per week for those wishing to safeguard their pension record.
Self-employed workers whose annual profits reach or surpass £7,105 automatically receive a qualifying Class 2 NI year at no cost whatsoever.
However, those with low earnings or who make a loss do not build up pension entitlement automatically and must actively choose to pay voluntary contributions.
MoneySavingExpert has reported that HMRC is asking people not to get in touch about the matter or try to submit the CWF1 form retrospectively, as doing so "could disrupt" efforts to resolve the problem.
The tax authority has confirmed that for anyone who became self-employed from the 2024/25 tax year onwards, the underlying issue has already been rectified.
