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HMRC internal manual

National Insurance Manual

Earnings periods: reallocating NICs for benefit purposes: general

Regulation 58, SS(C)R 2001

Regulation 58 assists individuals if their short or long term benefit entitlement is jeopardised because of reasons beyond their control. The regulation allows Class 1 NICs paid in one tax year to be reallocated to another tax year for benefit purposes. When considering reallocation under this regulation, it is important to remember the following points:

  • NICs can only be reallocated for benefit purposes. If reallocation will not help the employee, do not consider it;
  • NICs can be reallocated even if the employee has not made a claim to benefit;
  • employees cannot be expected to know about the existence of Regulation 58. If reallocation would help the employee, its provisions should be explained;
  • if the employee wants NICs to be reallocated, ask them to sign a declaration which indicates that they understand the consequence, that reallocated NICs can never be put back to the original tax year. For example, NICs reallocated from the 1995/96 tax year to the 1994/95 tax year will only count towards benefit as 1994/95 tax year NICs and cannot then count towards benefit as 1995/96 tax year NICs;
  • If reallocation makes the later tax year (in this example, the 1995/96 tax year) deficient for long term benefit purposes, invite the employee to pay sufficient Class 3 NICs to remove the deficiency (see NIM25000CO). These will be treated as paid timeously if paid within one month of the invitation.

Regulation 58 has two parts: 58(1) and 58(2). Each part caters for a particular situation. Regulation 58(1) is discussed at NIM09810 and regulation 58(2) at NIM09820