Long wait for national insurance numbersby
Individuals who need to apply for a national insurance number are having to wait up to 16 weeks for the number to be allocated, even if they apply using the DWP’s new online service.
A NINO is only allocated automatically at 15 years and nine months to those individuals known to DWP, because the individual’s parents made a claim for child benefit. Hence the need to have an open claim for child benefit, but with the payments paused for those subject to the High Income Child Benefit Charge (HICBC).
In the period from March 2020 to April 2021 the Department of Work and Pensions did not offer face-to-face ‘evidence of identity’ interviews for national insurance number (NINO) applications where identity hadn’t been verified, such as when granting a visa. This meant many individuals who were entitled to apply for a NINO struggled to obtain one.
Employment is possible
Not having a NINO is no impediment to employment, although I regularly meet employers and agents who refuse to employ people without a national insurance number. This is of course discriminatory as it has no relevance to someone’s right to work in the UK, nor the ability/requirement to pay NI, despite what it says on www.gov.uk/national-insurance.
Since the introduction of RTI it has always been possible to set up a payroll record without a NINO if you have the name, date of birth and two lines of the address.
HMRC will create a record on NPS with a temporary reference that will allow HMRC to identify the record. This number should not be used as a NINO – although they occasionally escape from HMRC systems and are sent to employers, those temporary references should never be used on a payroll record. These temporary references do themselves cause all sorts of problems as the data item guide for RTI illustrates in the appendix.
Universal credit problems
The problem of having no NINO really hits home when the earnings’ record is needed by DWP to calculate Universal Credit (UC). There are now over 2.3 million people (December 2020) who are working and in receipt of UC. This a very significant increase from 1m in March 2020 pre-pandemic, driven by the increase in the standard allowance that means those with higher earnings can be eligible.
Without a NINO the DWP can’t receive the earnings information that informs the calculation of UC. In such cases the employee should be asked by DWP to self-report or they will have an overpayment of UC.
This has been picked up in correspondence between Jim Harra of HMRC and Stephen Timms MP in which HMRC confirmed 6.5% of employments are reported as new starters without a NINO. That total is reduced by half in later submissions as HMRC are able to find a valid NINO to insert this into the record and inform the employer electronically to use this on the next FPS.
The HMRC letter indicates about 325,000 RTI records per month do not have a NINO. For 50% of those records, where a NINO has not yet been allocated, the record can’t be sent to DWP and the UC can’t be calculated correctly. The DWP are responsible for UC and yet it is that same department that has been unable to allocate NINOs.
UC is not a cumulative award so if the earnings for an assessment period do not arrive on time this overpayment won’t be corrected as a result of a later FPS submitted with a national insurance number.
Not having a NINO can mean that NI contributions aren’t allocated promptly to your NI record, which in return can make it appear that you have insufficient qualifying years for a full state pension.
Employees with ‘relief at source’ pensions need their employer to supply a NINO to the pension provider in order for them to make a tax relief claim to HMRC. Without a NINO the total contributions paid over must be the full 8% (of which the employer must pay a minimum of 3%). The practice of allowing for the 20% tax relief by netting down the employee contribution to 4% can’t happen, as no tax relief can be claimed until a NINO is provided.
New online service
The DWP has introduced a new online national insurance number application service, but the Employer Bulletin indicates that this process can still take 16 weeks to deliver a NINO. This is because the online application may still require an evidence of identity interview if another government department cannot corroborate identity.
So much for a digital solution streamlining the process - 16 weeks is a long time for universal credit overpayments to build up and for temporary references to misalign tax and NI records.