HMRC has initiated outreach to approximately 370,000 women regarding potential payouts, having identified over 5,300 cases of underpayment totaling around £42 million.

These underpayments primarily affect women who gave birth in the 1980s and 1990s, with each individual owed an average compensation of £7,859.

The error predominantly impacts stay-at-home mothers who claimed Child Benefit during this period, as their Home Responsibilities Protection (HRP) entitlements were not accurately recorded.

The HRP scheme was designed to reduce the number of years needed on National Insurance records for full state pension eligibility, but many women's entitlements were overlooked.

In 2010, HRP was replaced by National Insurance credits, which further complicated the situation as many women's records were not properly updated.

To ensure timely compensation, HMRC is prioritizing contact with individuals of pensionable age who meet the eligibility criteria.

To qualify for the payout, claimants must have received Child Benefit in their name for a child under 16 during the relevant financial year and not have contributed to the married woman's reduced stamp.

Despite an estimated 43,000 affected individuals having passed away, their families remain eligible to claim the owed compensation.

From January to September 2024, HMRC's efforts led to the identification of these underpayment cases, highlighting the scale of the issue.

The outreach efforts are crucial, especially for those who are already of pensionable age, ensuring they receive their compensation as soon as possible.

This historical tax error has significant implications for many women, particularly those who relied on Child Benefit or Income Support during the late 20th century.

Overall, the compensation initiative reflects a significant step towards rectifying past oversights in the tax system affecting women's pensions.