Discover if you are affected, which documents to check, and how to pay top-ups
HM Revenue & Customs (HMRC) has begun contacting up to 800,000 self-employed individuals following the discovery of a systematic reporting flaw that leaves workers at risk of losing thousands of pounds in State Pension income.
The issue impacts individuals who set up as sole traders between 2015 and March 2024. Due to an administrative loophole between registration platforms, hundreds of thousands of taxpayers filed annual Self-Assessment tax returns without their Class 2 National Insurance contributions (NICs) being credited to their permanent National Insurance record.
HMRC has published official guidance on how taxpayers can review their history on the GOV.UK National Insurance portal to identify missing qualifying years.
Am I affected? Which documents to look for?
You are potentially affected if you registered as self-employed in the UK between 2015 and March 2024.
To immediately determine your status, gather the paperwork from when you first went self-employed:
| Document to find | What it tells you | Status check |
| Unique Taxpayer Reference (UTR) Letter | Proves you registered for Self Assessment with HMRC | Does NOT guarantee Class 2 NI registration |
| Form CWF1 Confirmation | Proves you submitted the specific becoming self-employed and registering for National Insurance notification | If missing, you likely have gaps |
| Self Assessment Returns (2015/16 to 2023/24) | Shows profit declared and tax/NI calculated | Class 2 NI may have been missed if CWF1 was absent. |
Core problem:
If you received a 10-digit UTR number and submitted annual tax returns, you may have assumed your National Insurance record was automatically updated. However, unless Form CWF1 was completed alongside your initial Self-Assessment registration, HMRC’s systems did not treat Class 2 NICs as due or recorded.
Why did this happen?
Dual-registration loophole
Between 2015 and early 2024, HMRC maintained two separate entry points for new sole traders:
- Registering for Self Assessment (to pay Income Tax and Class 4 NI)
- Submitting Form CWF1 (to register specifically for Class 2 NI)
Many taxpayers—and online registration tools—only triggered the Self-Assessment setup. Tax returns were accepted and processed, but behind the scenes, Class 2 NI was left uncollected or uncredited.
Why didn’t HMRC or accountants stop this?
Accountancy software and commercial tax preparation tools calculated overall tax liability based on income figures. They often assumed HMRC had already linked the UTR to Class 2 NI liability.
Plus, HMRC communication was not what it should have been. System updates failed to flag the absence of Form CWF1 when Self-Assessment returns were submitted successfully year after year.
According to an HMRC Brief, it’s estimated around 160,000 customers aged above or within 2 years of State Pension age may be affected, but the brief stated, “this number may be lower once reconciled with DWP data.”
How will sole traders know they are affected?
HMRC stated affected customers will receive a letter by summer 2027 and those above State Pension age may also receive pension arrears. For affected customers not within 2 years of the State Pension age, HMRC is upgrading the online ‘Check Your State Pension Forecast’ tool so that, from Spring 2027, so self-employed people can use it to identify gaps themselves and make voluntary contributions.
The HMRC brief stated:
There is no need for any impacted customers to contact either DWP or HMRC at this stage. The letter will detail everything that the customer needs to do. Anyone who receives a letter or uses the upgraded online pension forecast tool (from Spring 2027) and identifies gaps in their NI record directly linked to this issue, will be able to make contributions beyond the usual 6 previous tax years and at the original rate.”
Myrtle Lloyd, HMRC’s Chief Customer Officer, said:
There is no need for people to do anything now. We have identified those affected and are contacting them to reassure that processes have been set up to remedy the situation now and for the future. We want to make sure no one misses out on their State Pension entitlements.
Customers who are self-employed and say so at the point of registering for Self Assessment are not affected and are charged the correct Class 2 National Insurance rate.
Customers who want to check if they have correctly registered can check their previous Self-Assessment returns to see if Class 2 is correctly reflected. Customers are advised not to retrospectively register – as this may disrupt the process of identifying those affected.
Self-employment surge
The 2015–2024 window coincided with a major expansion in freelancing, gig-economy work, and side hustles, accelerated further by the COVID-19 pandemic. Millions of people became self-employed for the first time without traditional corporate accountancy support, relying on direct online forms that omitted the secondary CWF1 requirement.
Note: HMRC updated its digital systems for the 2024/25 tax year onwards, eliminating the CWF1 requirement so new sole traders are now registered correctly in a single process.
How to fix your record and pay top-ups
Most people need 35 qualifying years of National Insurance contributions to receive the full new State Pension (currently £241.30 per week), and at least 10 qualifying years to receive any pension at all.
Step-by-Step Action Plan
✅Check your record online: Log into your Personal Tax Account via GOV.UK State Pension forecast to check for missing qualifying years between 2015 and 2024.
✅Do not submit form CWF1 now: HMRC has specifically warned taxpayers not to file retrospective CWF1 forms, as this could delay the automatic correction process.
✅Wait for Your Official HMRC Letter: HMRC is writing to affected taxpayers in phases. State Pension Age or within 2 years of it. Letters are arriving between now and Summer 2027. All other affected taxpayers will receive letters starting from Spring 2027.
✅Pay historical voluntary top-ups: While voluntary NI contributions are usually capped at the previous six tax years, HMRC is making an exception for this issue. Affected workers can buy back missing years dating all the way back to 2015/16 at original historical Class 2 rates (around £3.05 to £3.45 per week, or roughly £160–£180 per full year).
What if you can’t afford top-ups or have closed your business?
What if you closed your business?
Your right to fill these gaps remains intact regardless of whether you are currently self-employed, employed, retired, or unemployed. If you accumulated a gap during the 2015–2024 period, you retain the right to buy back those years at original Class 2 rates once HMRC contacts you.
What if you cannot afford to pay right now?
Check if you actually need to pay. Before spending money on top-ups, check your State Pension forecast. If you already have 35 qualifying years from earlier employed work, or will reach 35 qualifying years before state pension age, you do not need to pay anything. Missing years only matter if they prevent you from hitting the maximum threshold.
Low-cost top-ups: Class 2 voluntary top-ups are among the most cost-effective investments available. Buying one full missing year for ~£180 adds approximately £329 per year to your State Pension for the rest of your life.
No penalties: There are no fines or compulsory payment demands associated with these letters; voluntary contributions are entirely optional.
