How to claim a National Insurance refund

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National Insurance Contribution (NIC) overpayments do arise. The extent to which overpaid NIC can be refunded, and the mechanism for reclaiming, depend on the circumstances which gave rise to the overpayment.

Class 1 overpayment: employer error

Primary Class 1 contributions are payable by employed earners, while employers pay secondary Class 1 contributions.

Where an employee has overpaid Class 1 NIC because of a mistake made by their employer, the employer will normally be able to refund the overpaid contributions at the next pay day. If the employer is unable to sort out the refund, the employee should write to HMRC after the end of the tax year, stating:

  • Their National Insurance number

  • Why the overpayment arose

  • The tax year or tax years for which there is an overpayment

  • Tax and NIC paid in the tax year for which a refund is sought (include a copy of the P60)

  • An explanation of why the employer is unable to make the refund.

The application should be sent to:

HMRC

National Insurance Contributions and Employer Office

BX9 1AN

More than one employment

There is a cap (the annual maximum) on the amount of contributions that an individual can pay in the tax year. The annual maximum may be reached if a person has more than one job or is simultaneously employed and self-employed. By contrast, there is no ceiling on employer contributions.

The rules governing the return of contributions paid in excess of the annual maxima are set out in the Social Security (Contributions) Regulations 2001 (SI 2001/1004), reg. 52A.

The individual can apply to HMRC for a refund of those contributions paid in excess of the annual maxima. There is no time limit for making such an application. However, HMRC will only refund contributions in excess of a minimum amount.

Class 1 contributions paid in error but treated as properly paid (for example to protect pension and/or benefit rights) do not need to be repaid.

Contributions are repaid in the following order:

  • Primary Class 1 contributions payable at the reduced rate

  • Class 2 contributions

  • Primary Class 1 contributions payable at the main primary percentage

Return of contributions paid in error

Where Class 1 NIC has been in error, for example, because the individual was over state pension age, a refund can be claimed.  This must be done within six years after the end of the tax year for which the contribution was due to be paid (Social Security (Contributions) Regulations 2001 (SI 2001/1004), reg. 52).

However, a claim may be permitted after this deadline where the person making the application has a reasonable excuse (as defined by HMRC) for not making the application within the time limit, and the application was made promptly once that excuse had ceased.

Class 2 NIC

Class 2 NIC are paid at a flat rate by the self-employed. An overpayment of Class 2 NIC may arise in because the individual should not have paid Class 2 (for example, if they moved from self-employment to employment and continued to pay Class 2), or if they paid too much.

Refund because of error

A person can claim a refund of Class 2 NIC paid in error (in accordance with SI 2001/1004 reg. 52). The claim should be made within six years of the end of the tax year to which it relates, using on form CA8480.  This form can be submitted online or by post. The deadline may be extended if the contributor has a reasonable excuse.

Refunds in other circumstances

If the Class 2 NIC overpayment arose because the contributor paid too much, the refund application should not be made on form CA8480. Instead, the contributor should write to HMRC confirming:

  • Their National Insurance number

  • Why the overpayment arose

  • The tax year or tax years to which the overpayment relates

  • The earnings for that year or years

A copy of the taxpayer’s self-employed accounts should be included. The claim should be sent to

HMRC

National Insurance Contributions and Employer Office

BX9 1AN.

Class 3

If a person has paid a Class 3 voluntary contribution that they were not entitled to pay, those contributions can be repaid. The contributor should write to HMRC at the above address to request a refund.

The individual should provide their National Insurance number, and explain why they want a refund and the tax year or tax years to which the refund relates. The claim should be made within six years of the end of the tax year to which it relates.

Class 4

A refund of Class 4 contributions which should not have been paid can be reclaimed within five years from 1 February following the end of the tax year to which the claim relates (SI 2001/1004, reg. 102).

The refund can be claimed by contacting the self-assessment helpline on 0300 200 3310. However, HMRC may treat the contributions as payments on account of other contributions that may be due (SI 2001/1004 reg. 101), if a refund application is not made.

Where the annual maxima NIC has been exceeded and a person has paid too much in the way of Class 4 NIC, a refund can be claimed by completing form CA5610. The application should be made on or after 1 February after the end of the tax year to which it relates (i.e. once the self-assessment and payment deadline for that year has passed). There is no time limit on claiming a refund of class 4 NIC where the annual maxima has been exceeded.

National Insurance refund tool

HMRC have produced an online tool which can be used to help a user determine when a National Insurance refund may be due and the procedure for claiming it.

About Sarah Bradford

Sarah Bradford

Sarah Bradford BA (Hons) ACA CTA (Fellow) is the director of Writetax Ltd (www.writetax.co.uk) and its sister company, Writetax Consultancy Services Ltd. She writes widely on tax and National Insurance contributions and is the author of National Insurance Contributions 2015/16 published by Bloomsbury Professional. She can be contacted at [email protected]

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