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HMRC internal manual

National Insurance Manual

Earnings Periods: Reallocating NICs for benefit purposes: Mistimed payments

Regulation 58(1) SS(C)R 2001

Regulation 58(1) allows NICs paid in one tax year to be reallocated to another forbenefit purposes if it is established that those NICs were paid in respect of a regularearnings payment which was clearly mistimed or made out of turn.


A breakdown in an employer’s computerised payroll system meant that anemployee’s regular monthly earnings, of say, £900, due to be paid on 31 March 1997could not be paid until the end of the first monthly earnings period in the following taxyear, ie 30 April 1997. Under regulation 7(3) SS(C)R 2001 (see NIM08720)the earnings for March are kept separate from the earnings for April and NICs are assessedusing the rates and limits appropriate to the 1997/98 tax year based on a monthly earningsperiod.

Under Regulation 7(1) SS(C)R 2001 (see NIM08710) it is possibleto treat a mistimed earnings payment as if it had been made at the proper time.

Example A

Given -

  • earnings of £1,000 are due to be paid at the end of August
  • earnings of £1,300 are due to be paid at the end of September
  • the August earnings are mistimed and are paid at the end of September (total earnings received at the end of September, therefore, amount to £2,300)

Under Regulation 7(1), it is possible to treat the payment for August as if it hadactually been made at the end of August, in which case NICs are assessed separately oneach payment (£1,000 for August, £1,300 for September) on a monthly basis.

However, this does not apply to those situations where the payments cross taxyears. This is because Regulation 7(3) does not allow the Department to treat mistimedpayments as if they were paid at their usual time if such treatment means that the paymentwill be treated as paid in another tax year. In such cases, while the mistimed paymentmust be kept separate from any other earnings paid in the same tax year, NICs must beworked out using the rates and limits appropriate to the tax year of payment.

Example B

An employee has a monthly earnings period (earnings are paid on the last day of eachcalendar month) and the employment is not contracted-out. The employer’s computerisedpayroll system breaks down and as a result the employee’s earnings for March 2001 arepaid at the end of April 2001.The employee’s pay is £1,700 which represents £800for the period 1 to 31 March and £900 for the period 1 to 30 April. Calculate NICsseparately on each of these amounts as follows:-

2001/2002 tax year

monthly ET = £378

monthly UEL = £2,492

Earnings paid for March = £800

Employee NICs = (£800 - £378) x 10% = £42.20

Employers’ NICs = (£800 - £378) x 11.9% = £50.22

Total NICs = £92.42

Earnings paid for April = £900

Employee NICs = (£900 - £378) x 10% = £52.20

Employers’ NICs = (£900 - £378) x 11.9% = £62.12

Total NICs = £114.32

These NICs will form part of the employee’s record for the 2001/2002 tax year.However, in this example, the NICs paid in respect of the earnings for the period 1 to 31March (and the corresponding insurable earnings) can be reallocated from the 2001/2002 taxyear to the 2000/2001 tax year under regulation 58(1) if:

  • the employee’s record for the 2000/2001 tax year is deficient for benefit purposes; and
  • the employee agrees.

Using this example, employee NICs of £42.20 can, therefore, be reallocated to the2000/2001 tax year along with the corresponding insurable earnings of £488 ie £800 -£312 (LEL).

If it is decided that the provisions of regulation 58(1) can be invoked, continue actionas in NIM09830.


NICs can also be reallocated under regulation 58(1) from an earlier tax year to a latertax year. However, these situations will only arise in very exceptional circumstances.