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.