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HMRC internal manual

National Insurance Manual

Earnings Periods: Reallocating NICs for benefit purposes: Payment not mistimed

Regulation 58(2), SS(C)R 2001

Regulation 58(2), SS(C)R 2001 caters for the situation where the employment commencesin one tax year, but in line with the employer’s normal pay practice, the firstregular earnings payment is not made until the following tax year, ie the payment is notmistimed. The provisions of this regulation might be invoked, for example, where anemployee starts work towards the end of a tax year, after a long period of unemployment.The employee has no entitlement to NIC credits once the employment begins and receives noearnings at all for the rest of that tax year.


Given –

  • employee starts work on 16 March 2001
  • the employee has a monthly earnings period (earnings are paid on the 15th of each calendar month)
  • the employment is not contracted-out
  • in line with the employer’s pay practice, the employee receives their first earnings payment for the period 16 March to 15 April on 15 April 2001. The employee’s gross pay is £1,900.

Calculate NICs on £1,900 as follows:-

2001/2002 tax year

monthly ET = £378

monthly UEL = £2,492

Employee NICs = (£1,900 - £378) x 10% = £152.20

Employers’ NICs = (£1,900 - £378) x 11.9% = £181.12

Total NICs = £333.32

These NICs will form part of the employee’s record for the 2001/2002 tax year.However, in this same example, the employee’s NICs paid (£152.20) and correspondinginsurable earnings of £1,588 ie £1,900 - £312 (LEL), can be reallocated from the2001/2002 tax year, under regulation 58(2), if:

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

All of the NICs and insurable earnings are reallocated, not just a portion of them.

If it is decided that the provisions of regulation 58(2) can be invoked continue action asin NIM09840.