HMRC internal manual

National Insurance Manual

NIM41010 - Credits: overview: what are National Insurance credits

Regulation 3 of the Social Security (Credits) Regulations 1975

See the general provisions relating to the crediting of (National Insurance) contributions and earnings. The term National Insurance credits is commonly used to describe credited contributions/earnings.

DWP are responsible for the policy and legislation on credits issues.

National Insurance credits [equivalent to a Class 1 or Class 3 contribution] or credited earnings (which replaced Class 1 credits from 6 April 1987) are a substitute for National Insurance contributions (NICs). They may be awarded to people who are not liable or entitled to pay either Class 1 or Class 2 NICs in a particular pay week. The credit or credited earnings ensure that the person to whom they are awarded satisfies the conditions for entitlement to various benefits.

Credits are not normally available to married women with a valid married woman’s non-paying or reduced rate election. The exceptions are Class 3 starter credits and credits awarded for periods of imprisonment that resulted from a conviction (or convictions) which were subsequently quashed by a Crown Court, the Court of Appeal or High Court of Justiciary.

Widows with a non-paying or reduced rate election are entitled to credits.

Credits or credited earnings (still commonly referred to as “credits”) may count towards all contributory benefits or towards a limited range, depending on why they have been awarded.

Credits may be awarded because a person is entitled to certain social security benefit, such as Employment & Support Allowance, Job Seekers Allowance, Income Support or Carers Allowance. In addition, credits may be linked to the payment of Child benefit or Tax Credits. Credits may also be awarded for other reasons, such as when the individual has caring responsibilities, periods of jury service or periods of Approved Training.

We have in the past used the description ‘non benefit credits’ to describe credits that relied a separate clerical application processes, or automated systems, not linked to any DWP process. HMRC administers some but not all of these processes on behalf of DWP.

Whilst there is no legislative difference between ‘benefit’ and ‘non benefit’ credits, we have used the description ‘non benefit’ to describe those credits that HMRC is responsible for administering.

For a list of credits administered by HMRC and available before 6 April 1975 see NIM41105.

For a list of credits administered by HMRC and available since 6 April 1975 see NIM41205.