HMRC is contacting some self-employed individuals whose National Insurance records may contain gaps that could potentially affect their State Pension entitlement.
The correspondence relates to some people who were self-employed between 2015 and early 2024, and HMRC believes up to 800,000 taxpayers could potentially be affected.
If you receive a letter, it’s important to check your records before deciding whether you need to take any action or make voluntary contributions.
Why is HMRC contacting people?
HMRC has identified potential gaps in the National Insurance records of some self-employed individuals.
National Insurance contributions can help build entitlement to the State Pension, so missing qualifying years could potentially affect the amount someone receives in retirement.
For some affected individuals, there may be an opportunity to pay voluntary National Insurance contributions to fill certain gaps.
The current exercise may allow some people to address gaps dating as far back as the 2015-16 tax year.
What should you do if you receive a letter?
If HMRC contacts you, the first step should be to check your records rather than immediately deciding to make a payment.
You should look at:
Your State Pension forecast
Your State Pension forecast can show how much State Pension you could receive based on your current National Insurance record.
Your National Insurance record
Check whether there are any years showing as incomplete or missing.
Whether filling the gap would make a difference
A missing year doesn’t automatically mean that paying voluntary contributions will increase your State Pension.
You need to consider your individual record and whether additional qualifying years would actually improve your eventual entitlement.
Don’t assume you need to pay
Receiving a letter from HMRC doesn’t necessarily mean that you have a problem that needs fixing.
Some people may already have enough qualifying years to receive the full State Pension.
In those circumstances, paying voluntary National Insurance contributions may not provide any additional benefit.
This is why it’s important to check your individual circumstances before making a payment.
How can you check your records?
Your National Insurance record and State Pension forecast can be checked through your Personal Tax Account on GOV.UK.
Reviewing both can help you understand:
- How many qualifying years you currently have
- Whether there are gaps in your record
- Whether you are on track for the State Pension you expect
- Whether paying voluntary contributions could potentially improve your entitlement
It’s worth looking at both rather than relying solely on the letter from HMRC.
Why is the 2015-16 tax year important?
There are normally time limits around making voluntary National Insurance contributions for previous years.
However, HMRC’s current exercise may allow some affected self-employed individuals to address gaps going back to 2015-16.
This could potentially provide an opportunity for people who would otherwise be unable to fill older gaps.
The rules and whether a particular year can be filled will depend on the individual’s circumstances, so it’s important to check before making any payment.
Could paying voluntary contributions increase your State Pension?
It can, but not in every situation.
Whether paying voluntary contributions is worthwhile depends on factors such as your existing National Insurance record and how many qualifying years you ultimately need.
Someone with several gaps may find that filling certain years improves their State Pension entitlement.
Someone who already has sufficient qualifying years may gain little or nothing from making additional contributions.
The key point is that you shouldn’t assume that a letter from HMRC means you need to pay.
What should self-employed people do?
If you’ve received correspondence from HMRC, consider taking the following steps:
- Check that the letter relates to you and your National Insurance record.
- Review your National Insurance record.
- Check your State Pension forecast.
- Identify any missing or incomplete years.
- Consider whether filling a particular gap would increase your entitlement.
- Check the cost of any voluntary contribution before making a payment.
- Take advice if you’re unsure whether paying would be beneficial.
Taking a few minutes to understand your position could prevent you from making an unnecessary payment.
Why this matters for self-employed people
Self-employed people may have different National Insurance circumstances from employees, depending on their earnings and the contributions they’ve made.
Keeping an eye on your National Insurance record can therefore be an important part of longer-term financial planning.
It’s particularly useful to check your record periodically rather than waiting until retirement to discover that there are gaps.
Final Thoughts
HMRC’s letters about potential National Insurance gaps are worth paying attention to, but receiving one doesn’t automatically mean that you need to make a payment.
The important thing is to understand your own National Insurance record and State Pension position before deciding what to do.
For some people, making voluntary contributions could potentially increase their future State Pension. For others, paying additional contributions may not provide any financial benefit.
If you’ve received a letter from HMRC and aren’t sure whether filling a National Insurance gap would be worthwhile, get in touch. We can help you review your position and understand the potential implications.
📞 01527 368220
📧 info@ojwassociates.co.uk
