Tax blunder leaves 10m facing extra NI bill

More than 10 million people will be asked to pay hundreds of pounds of additional national insurance contributions following an administrative blunder by the Inland Revenue.

Letters are being sent out to those who ran up deficits on their contributions between 1996 and 2002. The letters, which the Inland Revenue insists are not bills, invite people to pay an average of £425 in voluntary contributions to ensure they do not lose their rights to the full basic state pension.

The worst affected group, about 200,000 people who missed contributions during the whole period, will be asked to pay up to £1,500 to safeguard their pensions.

A spokesman for the Inland Revenue, which took over responsibility for national insurance in 1999, said it had failed to issue reminders for the financial years 1996-97 to 2001-02.

"The people who have gaps in their national insurance contributions during that period are now being sent a letter advising them of what the position is and explaining their options. They can make contributions if they so wish," he said.

He said a failure to make the contributions might mean that the amount of the pension would be reduced. Workers will not be charged interest or fines for late payments.

About 1.2 million letters have already been sent out and all affected workers will be notified by September.