This part of GOV.UK is being rebuilt – find out what beta means

HMRC internal manual

National Insurance Manual

Refunds: Class 1 NICs: NICs paid in error: employer paid at the non-contracted-out rate instead of at the contracted-out rate

Regulation 54 Social Security (Contributions) Regulations (SSCR) 2001

Regulation 54(1) SSCR 2001 was repealed on 6th April 2016 by The Social Security (Contributions) (Amendment) (No. 2) Regulations 2016 (2016/352). However you may still need to deal with cases for 2015-2016 tax year and earlier.

Regulation 54 provides for HMRC to refund Class 1 NICs, on receipt of an application from an employer, who has incorrectly paid on account Class 1 NICs on behalf of an employee (employed earner) at the non-contracted out rate instead of the contracted-rate.

HMRC will refund the employer any overpaid Class 1 NICs after deducting the amount payable at the contracted-rate in respect of that employment.

Regulation 54(2) SSCR 2001 provides for HMRC to refund Class 1 NICs to the employee that have been paid by the employer and recovered from the employee. Where the employee gives consent in writing or by an approved form and electronic communications, HMRC will refund the Class 1 NICs to the employer.

Regulation 54(3)(a) and (b) SSCR 2001 allows for a refund application to be made within 6 years from the end of the year in which the contracting-out certificate in respect of the employment was issued.

This time limit may be extended but only where the employer:

  • had reasonable excuse for not making the application within that period; and
  • the application was made without unreasonable delay after the excuse had ceased