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Money, tax and benefits
How to claim back overpaid National Insurance Contributions
Whether you're employed or self-employed, there's a limit to the amount of National Insurance Contributions (NICs) you need to pay each tax year. There are certain circumstances where you might overpay NICs and you can claim the money back.
Paying NICs
You pay NICs if you are an employee or self-employed, and you are aged 16 to 65 for men or 16 to 60 for women, providing your earnings are over a certain level. Entitlement to some benefits, such as the State Pension and Jobseeker's Allowance, depends on the contributions you have paid.
The following amounts apply for the 2008-2009 tax year.
If you're employed
If you earn above £105 a week (the 'primary threshold') and up to £770 per week you pay 11 per cent of this amount as 'Class 1' NICs. You also pay one per cent of earnings above £770 a week as Class 1 NICs.
If you're self employed
You pay 'Class 2' NICs at a weekly rate of £2.30. However, if your earnings in the 2008-2009 tax year are expected to be less than £4,825 then you may be entitled to the Small Earnings Exception (SEE) and not pay Class 2 NICs. You can apply for SEE for the 2008-2009 tax year on form CF10.
In addition to Class 2 NICs, you also pay 'Class 4' NICs on a percentage of your profits. You pay eight per cent on annual profits between £5,435 and £40,040 and one per cent on any profit over £40,040.
Class 4 NICs are an annual charge and you are not liable to pay them until after the end of the tax year. For example, if you reach State Pension age during the 2008-2009 tax year you will still have to pay Class 4 NICs on all of your annual profits above £5,435.
When might you overpay
You might have overpaid NICs if:
- you stopped being self-employed and continued to pay Class 2 NICs
- you were still working and your employer continued to deduct Class 1 NICs from your earnings after reaching State Pension age
- your earnings were below the primary threshold
- you had more than one job and your combined earnings were more than the 'upper earnings limit'
- you were employed and self-employed at the same time and paid Class 1 and Class 4 NICs or Class 1, 2 and /or 4 NICs but paid more than you needed to
- you paid Class 2 NICs and your self employed earnings were below the SEE limit for the year
What to do if you think you've overpaid NICs
The National Insurance Contributions Office usually gets in touch if you've paid £43.50 or more above the annual limit for Class 1 and/or Class 2 NICs. However, if you think you've overpaid but haven't been notified write to HM Revenue & Customs after the end of the tax year (5 April).
What to write in your letter
- why you think you've overpaid
- which tax years and which class(es) of NICs you think you overpaid
- your National Insurance number
Always ensure you sign the letter.
Evidence you need to include
- a P60 or statement from your employer(s) showing NICs deducted from your wages during the tax year (Class 1)
- your quarterly bill receipt (Class 2)
- your Self Assessment Statement of Account (Class 4)
Where to send your letter
You need to address your envelope for the attention of the department dealing with your NIC class - the table below gives further information.
|
Class 1 and/or Class 2 NICs paid above the annual limit |
Wrongly paid Class 2 NICs |
Overpaid Class 4 NICs |
|---|---|---|
| 'Refunds Group' |
'Self Employment Services' |
'Deferment Services' |
| Send your letter to: |
||
Refund limits and deadlines
There is no deadline for reclaiming excess contributions where, for example, you had two jobs or were earning below the primary threshold. However, you'll only get a refund if the amount is over:
- £4.01 (Class 1 and 2)
- 50 pence (Class 4)
If you have overpaid for any other reasons, there is normally a six year time limit for claiming a refund.
If you are claiming a Class 2 NICs refund because your self employed earnings for the tax year were below the SEE limit, you must apply for a refund in writing, and supply evidence of your earnings for the whole tax year before 31 January following the end of the relevant tax year.
Send your refund application to: HM Revenue & Customs, National Insurance Contributions Office, Benton Park View, Newcastle upon Tyne, NE98 1ZZ.
Further information
For enquiries about a refund of Class 1 NICs, call the Employees helpline on 0845 302 1479. Lines are open Monday to Friday from 8.00 am to 5.00 pm.
Enquiries about SEE or Class 2 NICs refunds, call the Self Employed helpline on 0845 915 4655. Lines are open Monday to Friday from 8.00 am, to 5.00 pm.
If you're enquiring about a deferment or refund of Class 4 NICs, call Deferment Services on 0845 915 7141. Lines are open Monday to Thursday from 8.30 am to 5.00 pm and until 4.30 pm on Fridays.
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