Warning over HMRC 'tax error' that could see people 'lose benefits'

A tax expert is warning Brits of an HMRC tax error affecting delayed National Insurance contributions, which he said could potentially strip them of benefits. He has urged people to consider taking action to correct the situation.

Andy Wood, from Tax Natives, said: "HMRC's delay in handling National Insurance payments shows how important it is for self-employed people to keep records up to date and accurate. This could affect those earning less than £6,275.10, potentially impacting their access to key benefits such as the state pension and maternity allowance.

"The automatic rejection and refund of these contributions, labelled as 'paid late', may cause people to lose a qualifying year of National Insurance contributions. This could mean missing out on important benefits and other long-term financial consequences.

"This problem is specific to the current fiscal year. Consider making a special payment to HMRC to correct your contributions record and prevent any loss of benefits. If you think you might be affected, check if you've received any refunds from HMRC. If you find a refund, or if you're still unsure, we recommend calling the National Insurance Contributions helpline for guidance.

"Looking ahead, HMRC needs to quickly resolve this issue and take steps to avoid similar mistakes in the future. They need to communicate clearly and proactively support affected taxpayers. This is in line with their commitment to respect taxpayer rights and treat everyone fairly, as promised in their own charter."