Peter Arrowsmith, FCA

NATIONAL INSURANCE CONSULTANCY

Specialist technical support and other services for professionals

People with more than one employment and who did not claim deferment should in theory be offered refunds automatically by HM Revenue & Customs' National Insurance Contributions Office at Newcastle. However, given the long catalogue of problems with the NIRS2 computer, this should not be relied upon. In any event an actual claim for repayment will inevitably speed up the process. The maximum amount of NICs payable in 2004/05 (year ended 5th April 2005) was £3,025.77 PLUS amounts due at 1% additional rate on earnings over £31,720 pa, and if you have paid more than this the excess is reclaimable by you. Note that if some or all NICs were paid at the contracted-out rate (table letters D or F on the P60) a refund may (but not always) be due if NICs of more than £2,585.66 (PLUS amounts due at 1% additional rate on earnings over £31,720 pa) were paid. For married women who elected before 1977 to pay the reduced rate, the figure is £1,334.09 (PLUS amounts due at 1% additional rate on earnings over £31,720 pa).

The absolute amounts (as there was no additional rate of 1% above the Upper Earnings Limit prior to 6 April 2003) for some earlier years and the amounts - subject to adjustment for the 1% liability - for 2003/04 are -

                  FULL RATE      CONTRACTED OUT RATE      REDUCED RATE             UEL

2003/04     £2,949.98                           £2,520.89                         £1,300.67                 £30,940

2002/03     £2,628.60                           £2,208.19                         £1,012.09

2001/02     £2,586.40                           £2,172.58                            £995.76

2000/01     £2,432.70                           £2,043.47                            £936.59

1999/2000 £2,300.20                           £1,932.17                            £885.58

1998/99     £2,299.14                           £1,931.28                            £885.17

1997/98     £2,201.62                           £1,849.36                            £847.62

1996/97     £2,152.86                           £1,765.35                            £828.86             

However, there is no time limit for repayment claims where the maximum has been exceeded.

A different limit applies to those self-employed people who also have employment(s). The Class 4 'limiting amount' as it is called was £2,266.65 PLUS amounts due at 1% additional rate on earnings/profits over £31,720 pa for 2004/05. Class 4 refunds are never offered automatically and must always be claimed, if no application was made for deferment.

The Class 4 limiting amount for some earlier years (these are absolute figures as there was no additional rate of 1% above the Upper Earnings Limit prior to 6 April 2003) and the amounts - subject to adjustment for the 1% liability - for 2003/04 are as follows -

                                        UPPER LIMIT

2003/04     £2,212.00            £30,940

2002/03     £1,912.35

2001/02     £1,881.55

2000/01     £1,746.45

1999/2000 £1,455.35

1998/99     £1,411.15

1997/98     £1,356.15

1996/97     £1,328.65

However, from 8 October 2002 there is no longer any time limit for making repayment claims where the limiting amount applies. Earlier claims that were rejected for being too late should be re-submitted after that date.

We offer a review service whereby we can check your NICs position and report to you details of the claim(s) you should make, together with an estimate of the repayments due. The cost is £35 (including VAT) for checking one year and £70 (including VAT) for checking two-six years. If you require us to examine more than six years, please contact us and we shall be glad to discuss charges. Click here to download our application form.

Office 4, Knights Farm

Newton Road

Rushden

Northamptonshire

NN10 0SX

Phone/Fax: 01933 411941

E-mail: mail@niconsultancy.co.uk

Member of the Institute of Chartered Accountants in England and Wales

Updated 16/9/2005