Personal finance expert Martin Lewis claims many Brits could be owed thousands in overpaid tax because of a blunder
Martin Lewis issued some sage advice for parents who believe they may have been underpaid the State Pension(Image: Ken McKay/ITV/Shutterstock)
Martin Lewis says parents who had children between 1978 and 2010 may be due a potential windfall of more than £10,000 in backdated tax refunds due to a costly error in the State Pension. The consumer finance expert highlighted that some individuals could be in for a massive payout, referencing one instance where a woman won back £31,000.
In a post on his X account, Martin said: “State Pension error! Did you take time off work (1978 to 2010) to look after children or someone with long term disability? You could be owed £10,000s.
“In brief: 100,000s wrongly have Nat Insurance gaps that reduce your State Pension as they should’ve got ‘Home Responsibilities Protection’ [HRP]. The Govt was contacting people, but isn’t any longer. Thus the onus is on YOU to proactively check.”
He went on to describe the case of a woman who contacted his Money Saving Expert team and ended up clawing back tens of thousands of pounds. He revealed: “Cilla emailed us, ‘I’ve just received 15yrs’ back pay from HMRC of £31,674 for underpayment of my pension’.”
HM Revenue & Customs (HMRC) says it is scouring National Insurance (NI) records to identify those who might have been eligible for HRP from 1978 to 2010 but don’t have it recorded on their NI account. It is now in the process of sending out letters to some affected parties.
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The tax office said in a statement: “HMRC will send you a letter if we think you may have missing Home Responsibilities Protection (HRP). We want to help you make sure you receive the right amount of State Pension, so we’re asking you to check if you were eligible for HRP between 1978 and 2010.
“You may have been eligible if you received Child Benefit for a child under 16. The letter will tell you how you can check if you’re eligible to claim missing Home Responsibilities Protection and how to make a claim.”
James Murray, the Treasury minister, added: “The State Pension is the foundation of state support for people in retirement. We are urging people to check their National Insurance records to make sure they will receive the pension they deserve.”
What is the HRP scheme?
The HRP scheme was designed to protect the State Pension entitlements of parents and carers, but it was replaced by NI credits from April 6, 2010. Meanwhile, the Department for Work and Pensions (DWP) said it owed pensioners anywhere from £300m to £1.5bn in State Pension funds due to errors in recording HRP.
Accountancy firm Robson Laidler estimated that the average person could be due roughly £5,000 in backdated payments. A spokesperson said: “It is estimated tens of thousands of people are due an average of £5,000 in back payments. HMRC and DWP are also conducting a wider campaign to ensure that everyone who may be eligible is aware of the corrections exercise.”
Not having HRP listed on your NI record doesn’t necessarily mean your State Pension has been miscalculated, but it could impact those who had significant work breaks to look after children.
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The Robson Laidler spokesperson added: “We would therefore advise checking your own NI records rather than waiting for a letter from DWP/HMRC to arrive. There is no time limit for applying for HRP if it has not been awarded.”
They also highlighted a potential complication for those who claimed Child Benefit before a specific date, adding: “Anyone who may have claimed Child Benefit before May 2000, when it was not mandatory to provide your National Insurance Number on your claim, may not have the correct number of years for State Pension purposes on their NI record, if you first made a claim after May 2000, you will not be affected.”
The pension blunder was said to affect parents with children born within a 32-year period(Image: Nicholas T Ansell/PA Wire)How to check and apply
When beginning the online HRP check, you’ll be asked about any gaps in your NI record. If you’re unable to locate your National Insurance record online or are unsure about any of the questions, selecting ‘Do not know’ will guide you on how to obtain this information, reports the Liverpool Echo.
If you need to apply for HRP, or if you believe your record is incorrect, you should complete form CF411. Further information or advice regarding your HRP application can be found by clicking here.
Criteria for eligibility
You might still be eligible to apply for HRP if, for full tax years (April 6 to April 5 the following year) between 1978 and 2010, you were either:
Sharing the care of a child under 16 with a partner you lived with and they claimed Child Benefit instead of you – you may be able to transfer their HRPCaring for a sick or disabled person
In addition, you can apply if, for a full tax year between 2003 and 2010, you were either a foster carer or, in Scotland, caring for a friend or family member’s child (‘kinship carer’).
If you reached State Pension age on or after April 6, 2010, then any HRP you had for full tax years before that date was automatically converted into National Insurance credits, if you needed them, up to a maximum of 22 qualifying years.