HMRC has uncovered that thousands of women are owed compensation to the tune of £7,859 due to a historical blunder. The error predominantly impacted women who gave birth in the 80s and 90s during the Labour Party government’s tax reign.
In rectifying this, HMRC is now dispatching letters to notify them of their entitlement to a payout – which could be nearly £8k in an unexpected windfall. The mistake relates to Home Responsibilities Protection (HRP), which was employed to reduce the number of years needed on your National Insurance record to qualify for the full state pension.
Tax experts suggest that the individuals most affected are stay-at-home mums who claimed Child Benefit between 1978 and 2000. During this period, if you were at home raising children or caring for someone and receiving either Child Benefit or Income Support, you could acquire HRP.
However, the system underwent alterations in 2010, when HRP was superseded with National Insurance credits. Unfortunately, for thousands of people, their HRP entitlement wasn’t correctly recorded or transferred to their National Insurance record. This oversight by HMRC, which has now been recognised and is being rectified, means some have gaps in their record, according to Birmingham Live, reports Yorkshire Live.
Even more worryingly, as a consequence, they might be receiving less state pension than they’re entitled to, or will be in the future.
The tax department has initiated the process of sending letters to roughly 370,000 individuals. They have so far identified just over 5,300 instances of underpayment from January to September 2024, amounting to a total debt of around £42 million. On average, each person is owed approximately £7,859. It’s estimated that about 43,000 of the affected individuals have already passed away, but their families can still claim what’s due.
HMRC is prioritising those who are already of pensionable age and is contacting them first. To qualify, you must have been receiving child benefit in your own name (not that of a spouse or partner), your child was under 16 for the entire financial year in question, and you were not paying the married woman’s ‘reduced stamp’.