Whether you’re employed or self-employed, there’s a limit to the amount of National Insurance contributions you need to pay each tax year. If you overpay or wrongly pay National Insurance contributions you can claim the money back.
Paying National Insurance contributions
You pay National Insurance contributions if you are an employee or are self-employed, and you are aged 16 to State Pension age (currently 65 for men and 60 for women), providing your earnings are over a certain level. Entitlement to some benefits, such as the State Pension and Jobseeker’s Allowance, depends on the type and amount of National Insurance contributions you have paid or been credited with.
The following amounts apply for the 2009-10 tax year.
If you earn above 110 a week (the ‘primary threshold’) you pay 11 per cent on the excess over 110 as ‘Class 1′ National Insurance contributions up to the upper limit of 844 earnings per week. You also pay1 per cent of earnings above 844 a week as Class 1 National Insurance contributions. Below 110 you pay no National Insurance contributions.
You pay ‘Class 2′ National Insurance contributions at a weekly rate of 2.40. However, if your earnings in the 2009-10 tax year are expected to be less than 5,075 then you may be entitled to the Small Earnings Exceptionand not pay Class 2 National Insurance contributions. You can apply forSmall Earnings Exceptionfor the 2009-10 tax year on form CF10 Application for exception from liability for Class 2 contributions. Class 2 National Insurance contributions must be paid unless you apply for, and are issued with, a certificate of exception.
In addition to Class 2 National Insurance contributions, you also pay ‘Class 4′ National Insurance contributions on a percentage of your profits. You pay8 per cent on annual profits between 5,715 and 43,875 and1 per cent on any profit over 43,875.
Class 4 National Insurance contributions are an annual charge and are paid along with tax through the Self Assessment system in two ‘payments on account’ and (if appropriate) a final ‘balancing charge’.
Because they are an annual charge you will still haveto pay Class 4 National Insurance contributions on any profits for the year in which you reach State Pension age. For example, if you reach State Pension age on 1 May 2009 you will still have to pay Class 4 National Insurance contributions on all of your annual profits above 5,715 for the 2009-10 year, but will be exempt from Class 4 National Insurance contributions for tax years from 6 April 2010.
When might you overpay or wrongly pay?
You might have overpaid or wrongly paid National Insurance contributions if:
- you stopped being self-employed and continued to pay Class 2 National Insurance contributions
- you were still working after reaching State Pension age and your employer continued to deduct Class 1 National Insurance contributions from your earnings
- your earnings were below the primary threshold
- you had more than one job and your combined earnings were more than the ‘upper earnings limit’
- you were employed and self-employed at the same time and paid Class 1 and Class 4 National Insurance contributions or Class 1, 2 and/or 4 National Insurance contributions but paid more than you needed to
- you paid Class 2 National Insurance contributions and your self-employed earnings were below theSmall Earnings Exceptionlimit for the year
- you wrongly paid voluntary National Insurance contributions (in this case see the later section ‘If you think you’ve wrongly paid voluntary National Insurance contributions’)
- Check current National Insurance contributions rates on HM Revenue & Customs (HMRC) website Opens new window
to do if you think you’ve overpaid National Insurance contributions
HMRC’s National Insurance Contributions Office usually gets in touch if you’ve paid 47.50 or more above the annual limit for Class 1 and/or Class 2 National Insurance contributions. However, if you think you’ve overpaid but haven’t been notified write tothem after the end of the tax year (5 April).
- why you think you’ve overpaid
- which tax years and which class(es) of National Insurance contributions you think you overpaid
- your National Insurance number
Always make sure you sign the letter.
- a P60 or statement from your employer(s) showing National Insurance contributions deducted from your wages during the tax year (Class 1)
- your quarterly bill receipt (Class 2)
- your Self Assessment Statement (Class 4)
You need to address your envelope for the attention of the department dealing with your National Insurance contribution class – thesection below gives further information.
Where to send your letter asking for a National Insurance contributions refund
Benton Park View
Newcastle upon Tyne
You can complete form CA8480 to apply for a refund of Class 2 National Insurance contributions which have been paid incorrectly or in excess.
Refund limits and deadlines
There is no deadline for reclaiming excess contributions where, for example, you had two jobs or were both employed and self-employed. If you have wrongly paid for any other reasons, there is normally a six-year time limit for claiming a refund.
If you are claiming a Class 2 National Insurance contributions refund because your self-employed earnings for the tax year were below theSmall Earnings Exceptionlimit, you must apply forit in writing between 6 April and 31 January following the end of the relevant tax year, andprovide evidence of your earnings for the whole tax year.
Preventing National Insurance contributions overpayments if you have more than one job
If you’re an employee and you pay Class 1 contributions with two or more different employers or you are an employee paying Class 1 contributions and also self-employed and paying Class 2 and/or Class 4 contributions, you may be able to ‘defer’ some of your contributions to prevent an overpayment.
If you think you’ve wrongly paid voluntary National Insurance contributions
You may be able to claim a refund if you think you wrongly paid voluntary National Insurance contributions where all of the following apply:
- you’re due to reach State Pension age on or after 6 April 2010
- you paid voluntary National Insurance contributions between 25 May 2006 and 26 July 2007
- at the time you paid them you were unaware of the government’s intention to reduce to 30 the number of qualifying years required for a full basic State Pension because you had not received information from HMRC about that intention
Note that strict criteria must be met in order to qualify for a refund in these circumstances.
If you need more help
For enquiries about a refund of Class 1 National Insurance contributions, call the National Insurance Enquiries for Individuals Helpline on 0845 302 1479. Lines are open Monday to Friday from 8.00 am to 5.00 pm.
Enquiries about Small Earnings Exception or Class 2 National Insurance contributions refunds, call the Self Employed Helpline on 0845 915 4655. Lines are open Monday to Friday from 8.00 am to 5.00 pm.
If you’re enquiring about a deferment or refund of Class 4 National Insurance contributions, call Deferment Services on 0845 915 7141. Lines are open Monday to Thursday from 8.30 am to 5.00 pm and until 4.30 pm on Fridays.