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HMRC internal manual

National Insurance Manual

HM Revenue & Customs
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Class 3 NICs: Restrictions on the right to pay: precluded Class 3 NICs: payment of Class 3 NICs would cause the earnings factor to exceed the qualifying earnings factor for the tax year by an amount which is half, or more than half, the lower earn

Regulation 49(1)(d) Social Security (Contributions) Regulations 2001As explained in

NIM25001, a person is not entitled to pay (ie, is precluded from paying) Class 3 NICs in certain circumstances. One of those is that they cannot pay for any tax year if it would cause the aggregate of their earnings factors (“EFs”) derived from:

  • earnings on which primary Class 1 NICs have been paid (for the 2003/04 and subsequent tax years, earnings on which primary NICs at the main primary percentage rate have been paid (see NIM01110)); or
  • credited earnings; or
  • Class 2 NICs paid; or
  • Class 3 NICs paid or creditedto exceed the qualifying EF (see

NIM25001) by an amount which is half, or more than half, the lower earnings limit (“LEL”) for the tax year in question.

For the meaning of “credited” for the purposes of the above, see NIM25008.

ExampleFor the 2004/05 tax year:

  • the weekly LEL is £79
  • the qualifying EF is £4,108
  • Mr D’s has earnings on which he has paid Class 1 NICs at the main rate of £20,000.For details of the other circumstances in which a person is precluded from paying Class 3 NICs, see

NIM25006 - NIM25011 and NIM25013 – NIM25017.