Class 2 NIC payments incorrectly refunded by HMRC

Several reports to the Association of Taxation Technicians have highlighted unexpected refunds of voluntary Class 2 National Insurance Contributions (NICs) that were paid for the 2022/23 tax year, potentially having a detrimental effect on those self-employed individuals, who made voluntary payments, and had profits under £6,725.

For voluntary Class 2 NICs to apply and provide a credit for State Pension purposes, it must be paid by 31 January, following the end of the tax year however, during the last cycle, HMRC’s delays in processing 2022/23 tax returns resulted in some cases where the transfer of Class 2 NICs payments to the relevant NIC records was delayed. Therefore, some individuals who paid their taxes, including voluntary Class 2 NICs, have had the Class 2 element refunded in error, and when querying this, have been informed that their contributions are now late and cannot be accepted.

What should I do If my Class 2 NICs have been refunded?

The NIC Contributions office is available for direct contact, or alternatively, we can contact them on your behalf (subject to holding the relevant agent authority). They will provide you with a payment reference, enabling you to make a special payment directly to them, ensuring that your voluntary Class 2 NICs are correctly accounted for and credited towards your State Pension for the tax year 2022/23. It is not possible to deposit the amount back onto your Self-Assessment account.

Introduction of a new online voluntary NI payment service

On 29 April, HMRC launched a new online service called Check your State Pension Forecast. This service offers an estimate of potential increases to your State Pension if you make voluntary contributions, along with insights into the voluntary NI contributions required to achieve them. Individuals below the State Pension age can use this tool to identify gaps in their NI record and make voluntary contributions to address them. If you have gaps in your NI record between 6 April 2006 and 5 April 2018, and are eligible to make voluntary contributions, you have until 5 April 2025 to do this. From 6 April 2025, those eligible to make voluntary contributions will only be able to do so for the previous six tax years.

How can we help you

If you require any advice or support regarding voluntary NIC contributions, please do not hesitate to contact our specialist tax department, and one of our dedicated team members will be in touch.

Email: [email protected]

Phone: 01926 422292