NIM07068 - Class 1 NICs: Payments made under employment legislation: Re-allocating primary NICs paid on a payment made under a reinstatement order, a re-engagement order, an order for the continuation of a contract of employment or a protective award:
Period to which payment relates falls partly in the tax year in which the NICs were paid and partly in one or more other tax years
As explained in NIM07066, an employee who has paid NICs on a payment made under:
- a re-instatement order (see NIM07020 – NIM07021);
- a re-engagement order (see NIM07030 – NIM07031);
- an order for the continuation of a contract of employment (see NIM07040 onwards);
- a protective award (see NIM07050 onwards)
may request that those NICs are treated as paid in an earlier tax year to the one in which the NICs were actually paid if this will protect or enhance their benefit/pension position for the earlier year.
Where the period to which the payment relates falls partly in:
- the tax year in which the NICs were paid; and
- one or more other tax years
the NICs can, if the employee so requests, be treated as paid in proportion for each of the tax years in which the period to which the payment of earnings relates falls.
Example
Employer H makes a payment under a reinstatement order to an employee on 31 July 2025. NICs are paid on that date (ie in the 2025/26 tax year). The payment represents arrears of pay for the period 1 January 2025 to 30 April 2025 (ie, the 2024/25 and 2025/26 taxyears).
As the period to which the payment relates – 1 January 2025 to 30 April 2025 – falls partly in:
- the tax year in which the NICs were paid (2025/26); and
- another tax year (2024/25 in respect of the period 1 January 2025 – 5 April 2025)
the NICs can, if the employee so requests, be treated as paid proportionately for the 204/25 and 2025/26 tax years.
For details on how to apportion the amount of NICs paid, see NIM07070.