Repayments of NIC arising from two or more jobs

By Tolley

The following Personal Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Repayments of NIC arising from two or more jobs
  • How an overpayment of NIC can arise
  • Collection and deferment
  • Calculation of annual maximum

How an overpayment of NIC can arise

There is an annual maximum of contributions applying to any individual for a contribution year (tax year). This applies where the earner either:

  • has two employments (and is therefore paying Class 1 NIC twice) (SI 2001/1004, reg 21)
  • is both employed and self-employed (and is therefore paying Class 1, 2 and 4 NIC) (SI 2001/1004, reg 100)

There is a proforma that must be followed to calculate whether a repayment is due. See below.

The start of a new tax year might require some consideration as to NIC paid in the past and a look ahead to the future, depending on clients’ current circumstances. For example, deferral of Class 1 contributions might need to be applied for or an existing deferral renewed.

Note that it had been expected that Class 2 NIC would be abolished from 6 April 2019, with Class 4 NIC reformed to include a contributory benefit test. However, it was announced  on 6 September 2018 that the Government has abandoned this plan; Class 2 NIC will be retained in its current form. See the National insurance contributions for unincorporated businesses guidance note.

Collection and deferment

Where an individual can demonstrate that he is paying more than the annual maximum of NIC (see below), it may be possible to apply for deferment.

From 2015/16 onwards, it is only possible to make an application for deferment of Class 1 NIC. Prior to 2015/16, it was also possible to apply to defer Classes 2 and 4 NIC. This is because, with the collection of Class 2 NIC being within the Self Assessment Tax Return from 2015/16, Class 2 NIC is payable at the same time as Class 4

More on National insurance contributions: