If you have been self-employed at any point since 2015, it is worth checking something that has nothing to do with the tax you paid. A flaw in how HMRC handled self-employment registrations means some people who declared self-employed or partnership income on their tax returns never had Class 2 National Insurance recorded against them. Those years may not count towards their State Pension.
This one is unusual because the mistake was not the taxpayer's. HMRC has acknowledged the problem, is writing to the most urgent cases first, and has said affected people will be able to fill the gaps on favourable terms. For most people it is an opportunity rather than a bill. Here is what happened and how to check your own record.
In a nutshell
- A registration form gap caused this. Filing a tax return was not always enough to register for Class 2.
- It affects tax years 2015/16 to 2023/24. The process was fixed from 2024/25 onwards.
- Letters are going to the most urgent cases first. Not everyone will hear this year.
- A missing year may or may not cost you. Your own forecast is the only reliable answer.
- Filling a gap at the Class 2 rate is cheap. Around a fifth of the Class 3 price.
- Check your record, but do not rush to ring HMRC. HMRC has asked people to wait.
1. What went wrong with Class 2 registration
The cause is a quirk of HMRC's registration forms. Registering for Self Assessment using form SA1 signs you up for income tax and Class 4 National Insurance, but not Class 2. Only form CWF1, the self-employment registration, does that.
The trap caught people who already had a Self Assessment record. If you had a UTR from something else, or from earlier self-employment, and then started declaring self-employed income on your return, it was easy to assume you were fully registered. You filed correctly and paid your tax, but Class 2 was never set up, so the year did not always become a qualifying year.
This matters because from 2015/16, Class 2 was assessed and collected through Self Assessment, so the registration record became the thing that made it work.
2. Who is affected and who is being contacted
The affected window is tax years 2015/16 up to and including 2023/24. HMRC describes the group as people who declared self-employed or partnership income on a tax return for one of those years but did not register to pay Class 2. Partners in partnerships are included, not just sole traders.
The window closes at 2023/24 because the rules changed on 6 April 2024. From 2024/25, if your profits are at or above the Small Profits Threshold you are treated as having paid Class 2 without registering, so the qualifying year no longer depends on a form. The underlying process is fixed.
On scale, HMRC has told professional bodies that up to 800,000 people may have gaps, of whom around 160,000 have reached or are within two years of State Pension age. Those figures reach us via bodies such as the ICAEW rather than published gov.uk guidance, so treat them as indicative.
3. What the letter says and what it does not
HMRC is contacting urgent cases first. Its guidance is specific: it will write to you only if you are at or within two years of State Pension age and those years are not already qualifying. That is the roughly 160,000 group, not all 800,000. If you are younger, expect to hear nothing for some time.
The letter reference is LCL2REG2MM, listed on the gov.uk page for checking whether an HMRC letter is genuine. Worth knowing, because a letter about pensions is exactly what scammers imitate. HMRC will not ask for bank details by text or email about this.
Importantly, the letter is not a demand for payment. It asks you to contact the Department for Work and Pensions first, so DWP can tell you what effect paying for those years would have on your pension, before you decide whether to pay.
4. Why a missing year might not reduce your pension
Here is the part people get wrong. A gap in your record does not automatically mean a smaller pension.
You usually need 35 qualifying years for the full new State Pension, currently £241.30 a week, and 10 years to get anything at all. But that 35 year figure applies cleanly only if your National Insurance record started after April 2016. Most people in this group were working before then, so they fall under transitional rules, and anyone who was contracted out usually needs more than 35 years.
So nobody can tell you from a rule of thumb whether a missing year costs you money. If you already have enough qualifying years, filling a gap may buy you nothing. That is exactly why HMRC's letter tells you to speak to DWP before paying.
5. What filling a gap year actually costs
If a gap is worth filling, the rate matters enormously. Voluntary Class 2 for 2026/27 is £3.65 a week, so a full year is about £190. Voluntary Class 3, the rate most people are quoted for old gaps, is £18.40 a week, or £956.80 a year. A difference of over £760 per year.
HMRC has said affected people will be able to pay at the original rate for the year concerned, and to go back further than the usual six year limit, as far as 2015/16. An older year such as 2015/16 was £2.80 a week, so nearer £146. Both commitments come from HMRC statements to professional bodies, not yet from published gov.uk guidance, which still sets out the plain six year rule.
The money point: nobody should pay the Class 3 price for a year that qualifies for Class 2. No payment deadline has been published, so ignore any source quoting one.
6. What to do now and what to avoid
The most useful thing is to check your own position, which you can do today without contacting anyone:
- Look at the Class 2 National Insurance line on your past tax calculations and in your online HMRC account, to see whether it was ever actually charged.
- Use the Check your National Insurance record service to see which years count and where the gaps are.
- Use the Check your State Pension forecast service to see what you are on track for and whether filling gaps would change it.
What not to do yet: HMRC has asked people not to contact it about this and not to submit a retrospective CWF1, because that could disrupt the fix it is building. Gather your information, and when your letter arrives, follow it and speak to DWP before paying anything.
If you are only now starting out in self-employment, the prevention side is simple and we have covered it separately: register properly, with the right form, in good time.
A worked example: Marta, self-employed since 2017
Marta already had a UTR from a previous job that required a tax return. When she started working for herself in 2017, she added self-employment to her return each year, filed on time and paid her tax, so she assumed everything was in order.
Checking her National Insurance record, she finds three years that do not count. Her forecast shows she is short of the qualifying years she needs, so those years are worth filling. At the Class 2 rate they cost roughly £570 in total. At the Class 3 rate the same three years would cost about £2,870. Being treated as a Class 2 case saves her around £2,300 for the same pension outcome.
Things to watch out for
- This is not automatic compensation. For most people it is a chance to buy back years cheaply, not money owed to you.
- A gap does not always cost you. Check your forecast before assuming you need to pay.
- Do not confuse it with the 2024/25 issue. HMRC separately added Class 2 charges in error to some 2024/25 returns, corrected in 2025. Different matter.
- Watch for scams. The genuine letter reference is LCL2REG2MM, and HMRC will not ask for bank details by text or email.
- No deadline has been announced. Treat any cut off date you see quoted as unverified.
How Ollen Services Can Help
Working out whether you actually have a problem, and whether it is worth fixing, takes a look at your real records rather than a general rule. We review your past tax calculations to see whether Class 2 was ever charged, check your National Insurance record against your State Pension forecast, and tell you honestly whether filling a gap would improve your pension or make no difference.
If you are self-employed or a partner and have been filing since 2015, this is worth ten minutes of someone competent looking at it. We work in English and Polish.
Call us on 07513 491 259 or email hello@ollenservices.co.uk. It costs nothing to find out where you stand, and the gap between the two National Insurance rates can run into thousands.