People who became self-employed between 2015-2024 should ensure there are no gaps in their records (Image: Getty)
People who started working for themselves between 2015 and 2024 could have gaps in their National Insurance (NI) record if they did not notify HMRC using the CWF1 form, even if they registered for self-assessment. Those missing NI contributions may not be on course to receive the full State Pension, potentially leaving them thousands of pounds worse off over retirement. However, there is no need to take action immediately, as HMRC has confirmed it will contact anyone affected directly. The tax authority estimates that around 800,000 people have been impacted by the issue, including approximately 160,000 individuals who have already reached, or are within two years of reaching, State Pension age.
For self-employed workers, entitlement to the full new State Pension, at the moment worth £241.30 a week, generally requires at least 35 qualifying years of National Insurance contributions, although some people may need more depending on their individual circumstances.
Self-employed people build up qualifying years through Class 2 National Insurance contributions, with the amount payable depending on annual earnings.
Missing National Insurance payments could lead to losing thousands of pounds in your pension (Image: Getty)
Those generating less than £7,105 a year can choose to make voluntary Class 2 contributions to prevent gaps in their National Insurance record, Money Saving Expert reports. For the 2026/27 tax year, these voluntary payments cost £3.65 a week, meaning a full year’s contributions would total around £189.80.
Anyone with annual profits of £7,105 or more receives Class 2 National Insurance credits automatically, protecting their State Pension record. Depending on earnings, they may also have to pay Class 4 National Insurance contributions, although these do not count towards State Pension entitlement.
Before 6 April 2024, self-employed workers with profits above a set threshold, which was £12,570 during the 2023/24 tax year, were also required to pay mandatory Class 2 National Insurance contributions. That requirement was removed from the 2024/25 tax year and subsequently.
The problem dates back to 2015, when newly self-employed people were required to both register for self-assessment and separately inform HMRC of their self-employed status by submitting the CWF1 form. Anyone who failed to complete that additional step, even if they correctly completed the self-employed section of their tax return, may not have paid the correct amount of Class 2 National Insurance. As a result, they could have incorrect gaps in their National Insurance record, potentially reducing the amount of State Pension they receive if they do not have enough qualifying years elsewhere.
HMRC said only “a minority” of people who registered as self-employed between 2015 and 2024 have been affected, although it believes this could still amount to around 800,000 individuals. According to the department, the issue arose because the CWF1 form was needed “for Class 2 to be assessed and collected correctly”. HMRC says improvements introduced from the 2024/25 tax year mean the correct contributions will now be added even if someone does not submit the CWF1 form, meaning the issue has been fixed going forward.
HMRC has began notifying those who may be affected (Image: Getty)
Letters notifying affected individuals began being issued this month, although HMRC has said they will be sent in phases to ensure it has sufficient resources available to help people who get in touch. Those who are already at State Pension age, or who will reach it within the next two years, should expect to receive a letter by “summer 2027”. Everyone else affected is expected to start receiving letters from spring 2027 onwards.
Anyone contacted by HMRC will be directed to speak with the Department for Work and Pensions (DWP), which will help them understand whether the issue has affected their State Pension entitlement. The DWP will also advise whether making additional National Insurance contributions to fill any gaps would be worthwhile.
Although people are normally only able to fill National Insurance gaps going back six tax years, HMRC has confirmed that those affected by this issue will be allowed to pay voluntary contributions for earlier years dating back to 2015, using the original contribution rates.
The Government is also updating the Gov.uk State Pension Forecast tool, which allows people to check how much State Pension they are likely to receive, when they can claim it and whether there are opportunities to increase their entitlement by filling gaps in their National Insurance record.
“From spring 2027”, self-employed people will also be able to check whether they have National Insurance gaps related to this issue or for any other reason, see whether paying to fill those gaps would increase their State Pension, and make voluntary National Insurance contributions through the online service.
Until then, HMRC is advising people not to take any action. The department says contacting it or attempting to complete the CWF1 form retrospectively “could disrupt” the process of resolving the issue for everyone affected.