National Insurance Refunds
On this page you will find information about:
National Insurance for the Employed
Can I get a NI refund if I have paid too much National Insurance?
There are different circumstances that can result in you being entitled to an NI refund.
You can usually obtain a refund if you have overpaid National Insurance, although time limits often apply. In most cases there is no time limit for claiming a National Insurance refund for example if you had more than one job. However, if you have been self employed and have overpaid Class 2 NI contributions you can usually only receive a refund if you make your claim before the end of the following tax year.
Why would I be due a National Insurance Refund?
There are several reasons why you might have paid too much National Insurance, depending on your circumstances, for example:
- You are missing NI years due to your account not being credited by HMRC.
- You have left the UK and meet specific criteria.
- If you are working but you are over state pension age, you may be overpaying Class 1 National Insurance.
- You had combined earnings of more than £817 per week and had more than one job in the 2012/2013 tax year.
- Opting out of the state pension scheme.
It is important to make sure that you have paid the correct amount of National Insurance and that your National Insurance contributions record is up to date.
National Insurance for the Self Employed
Can I get a NI refund if I have paid too much National Insurance?
If you are self-employed and you make Class 2 National Insurance contributions, you may have paid too much if your profits are less than a certain amount (£5,595 in 2012-13), or if you are over state pension age.
If you have been employed and self-employed in the same tax year, and making different kinds of National Insurance contributions, you may have overpaid.
If you are self-employed and you make Class 4 National Insurance contributions, you may have overpaid if you are over the state pension age, or if you have paid on earnings that have already had Class 1 NI deducted, or if your profits are over a certain amount (£42,475 in 2012).
Other reasons for overpayment of NI contributions include making voluntary Class 2 or Class 3 contributions when living abroad.
In many cases HMRC will contact you directly to say that you have overpaid Class 1 or Class 2 contributions. However, if you think you have overpaid National Insurance and are due a National Insurance refund you can contact HMRC directly.
Missing National Insurance Years
What are Missing National Insurance Years?
Each employer should provide HMRC with the amount of national insurance paid by each employee at the end of each tax year. It has been stated that up to 9 million tax payers have not had their National Insurance payments correctly recorded by HMRC, due to missing information provided by their employer. This means that the missing National Insurance years could affect the amount of state pension that you receive when retiring. If you have not paid National Insurance contributions for a certain number of years, you could end up receiving less of a state pension than you are entitled too.
Who does it affect?
The missing National Insurance years issue could potentially affect anyone. The missing records have not affected just one particular group of people.
How do I know if it affects me?
It is common for HMRC to write to people where a gap in National Insurance appears. It is important to carefully read any correspondence received to make sure the information is accurate and compare with your own records. If you have not received any correspondence but would like to check your National Insurance record you can contact HMRC.
What do I do if it is wrong?
HMRC will request any information needed to update your record for example P60 or P45 certificates and will then let you know what will happen next.
National Insurance Refund if you have left or are leaving the UK
It is very common for people worked in and left the UK to claim UK tax back. The National Insurance paid in the UK is not the same and there are only certain circumstances where a National Insurance refund can be claimed.
The main reasons why you may be due a National Insurance refund if you have left the UK are listed below:
- If you have been sent to the UK to work by your employer and you leave the UK, it is possible to reclaim any national insurance contributions made for the first 52 weeks of your stay in the UK.
- If you are non resident in the UK and pay national insurance contributions it is worth considering whether you may be eligible to receive a National Insurance refund. Certain criteria have to be met and each situation has to be taken on its own merits.
- The vast majority of people who have left or are leaving the UK will not usually claim their state pension. It is therefore worth considering transferring the
National Insurance contributions into a personal pension which could provide you with more alternatives in the future. In this situation a National Insurance refund can only be given by the way of an investment into a stake holders pension scheme and not in cash.
Class 1 National Insurance & The State Pension Scheme
If you are working but you are over state pension age, you may be overpaying Class 1 National Insurance. It is possible that if your employer was deducting Class 1 National Insurance, after reaching State Pension age you could be entitled to a National Insurance refund.
Class 1 National Insurance Refund more than one job
If in the 2012/2013 tax year if you had more than one job and you earned over £817 per week, it is worth double checking if you have overpaid Class 1 National Insurance. Due to earning over a certain limit it is possible that if you had more than one job you can overpay Class 1 National Insurance.
How do I claim a Class 1 National Insurance Refund?
To confirm if you are due to claim a Class 1 National Insurance refund you should contact HMRC directly which will allow for any National Insurance refund to be highlighted and repaid.
Opting out of the State Pension Scheme
It is possible to have a portion of your annual National Insurance contributions allocated to your own stakeholder pension in the UK. You have a choice to opt out of the state pension scheme and to have the national insurance contributions sent to your own personal stakeholder pension fund. To be eligible you have to be employed and have a permanent national insurance number. The NI refund can be made at anytime and the process only needs to be done once to take effect for all future years.
It is important to consider the affects of opting out of the state pension scheme and talking to a financial adviser would be helpful to make sure that you are making the right decision in your circumstances.
For further Tax Refund information, please follow the links below: