A recent issue with Class 2 National Insurance Contributions (NICs) for the 2024/25 tax year has come to our attention, and we want to ensure you’re aware of what’s happening and what it means for you. The Chartered Institute of Taxation (CIOT) and the Association of Taxation Technicians (ATT) have flagged this issue, and HMRC is actively working to resolve it.

What’s the Issue?

Following changes announced in the Autumn Budget 2024, the rules for Class 2 NICs have shifted. Self-employed individuals with profits above £6,725 are no longer required to pay Class 2 NICs but will still receive a National Insurance credit to maintain eligibility for benefits like the State Pension. Those with profits below £6,725 can choose to pay Class 2 NICs voluntarily to protect their benefit entitlements.

However, HMRC has identified a glitch in their systems that’s causing some Self-Assessment tax calculations (SA302) for 2024/25 to incorrectly include a Class 2 NICs charge. Specifically:

• For those with profits above £12,570, some calculations are showing a Class 2 NICs charge of £358.80 (or less, depending on your situation) when it shouldn’t be included.
• In other cases, a £179.40 charge has been added in error, and in some instances, this has doubled the tax liability shown on the SA302.

This error is due to HMRC’s systems not fully aligning with the updated Class 2 NICs rules for the 2024/25 tax year.

What Does This Mean for You?

If you’ve received your 2024/25 SA302 tax calculation, it’s worth taking a moment to review it. Look out for any unexpected Class 2 NICs charges, especially if your profits exceed £6,725 and you haven’t opted to pay Class 2 NICs voluntarily. An incorrect charge could inflate your tax liability, so it’s important to catch this early.

HMRC’s Response

HMRC became aware of this issue on 9 May 2025 and is treating it as a priority. Here’s what they’re doing:

• Correcting Records: Where possible, HMRC has already updated affected records based on the information they hold. If your record was corrected, you should have received a notification from them.
• Timeline for Fixes: HMRC aims to resolve all remaining cases by the end of July 2025, ensuring no incorrect charges impact your final tax bill for 2024/25.
• Refunds or Credits: If you’ve paid an amount that includes an erroneous Class 2 NICs charge, HMRC will either refund it or apply it as a credit to your Self-Assessment account.

HMRC has advised that you don’t need to contact them at this stage, as they’re working to fix the issue proactively.

What You Can Do

To stay on top of this, here are a few simple steps you can take:

1. Check Your SA302: Review your 2024/25 Self-Assessment tax calculation for any unexpected Class 2 NICs charges. If you’re unsure what to look for, feel free to reach out to us, and we’ll check it for you.

2. No Immediate Action Needed: Since HMRC is addressing the issue automatically, you likely won’t need to take any steps unless we advise otherwise.

3. Watch for HMRC Updates: Keep an eye on your HMRC online account or mailbox for notifications about corrections to your record.

4. Verify Your NI Record: To ensure your State Pension and other benefit entitlements are secure, you can check your National Insurance record via the HMRC app or online portal. If you need help accessing this, we’re happy to assist.

A Note on Past Issues

This issue is unrelated to a previous error in 2022/23, where some clients with profits below £6,725 had their voluntary Class 2 NICs payments incorrectly refunded. If you were affected by that issue, HMRC should have already reached out to resolve it.

We’re Here to Help

We know that tax errors can feel unsettling, but rest assured that HMRC is working to correct this issue, and it should have no long-term impact on your tax obligations or benefit entitlements. We’ll continue to monitor updates from HMRC and keep you posted on any further developments.

If you have questions about your Self-Assessment, National Insurance contributions, or anything else, don’t hesitate to get in touch. Our team is here to guide you through these changes and ensure your records are accurate.

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