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HMRC internal manual

National Insurance Manual

From
HM Revenue & Customs
Updated
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Class 1 structural overview from 6 April 2009: changes to the excess refund process from 6 April 2009

From 6 April 2009 NPS will continue to inform Payment Reconciliation of:

  • any primary Class 1 NICs paid in excess of a person’s annual maximum and
  • any Class 1 and Class 2 NICs paid in excess of a person’s annual maximum.

This automated process is still subject to a de minimis level of half the relevant year’s Lower Earnings Limit

Although the introduction of an uncapped primary Class 1 liability on all earnings above the Upper Earnings Limit means that each contributor will have an individual maximum based on the level of their earnings, it will continue to be possible for a person to pay in excess of their prescribed maximum.

This is because where a person fails to apply for deferment - see NIM01180 - they will pay Class 1 NICs at the:

  • main primary percentage on all earnings above the Primary Threshold up to and including the Upper Earnings Limit in each employment
  • additional primary percentage on all earnings above the Upper Earnings Limit in each employment.

Where this occurs, NPS will continue to identify excess payments and refer cases to NIC&EO who will take any necessary action to invite a claim and refund the excess payment.

Regulation 52A SS(C) R 2001 provides for the repayment of excess contributions and requires their return in a strict order of priority. This priority order ensures that contributions payable to the person’s chosen pension scheme are protected.

Any enquiries about potential excess refunds should be referred to Payment Reconciliation, NIC&EO.