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HMRC internal manual

National Insurance Manual

From
HM Revenue & Customs
Updated
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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 moreother tax years

As explained in NIM07066, an employee who has paid NICs on apayment made under:

may request that those NICs are treated as paid in an earlier tax year to the one inwhich the NICs were actually paid if this will protect or enhance their benefit/pensionposition 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 ofthe 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 2001.NICs are paid on that date (ie in the 2001/02 tax year). The payment represents arrears ofpay for the period 1 January 2001 to 30 April 2001 (ie, the 2000/01 and 2001/02 taxyears).

As the period to which the payment relates – 1 January 2001 to 30 April 2001 –falls partly in:

  • the tax year in which the NICs were paid (2001/02); and
  • another tax year (2000/01 in respect of the period 1 January 2001 – 5 April 2001)

the NICs can, if the employee so requests, be treated as paid proportionately for the2000/01and 2001/02 tax years.

For details on how to apportion the amount of NICs paid, see NIM07070.