How have I overpaid NI for last year? 6 June 2022 at 9:49AM in Cutting tax 2 replies 84 views

Sammyf2970

Hi
I am hoping somebody can help get my head around this! 

Last year 21/22, I earned £18436 taxable pay yet paid £1426.95 in NI (class A). I see this as an overpayment of around £300 however when I have spoken to employer and HMRC it’s not. 

I was on maternity leave for the majority of the year and ended up getting tax refunds towards the end, but obviously NI don’t take this into account. So I have paid over £300 more than somebody who has earned the same amount! 

Can anybody help me to understand this? 

Thanks 

chrisbur

NI is payable on what you earn each pay period, unlike tax which is payable on your taxable income for the year.  This means that if your income is low some pay periods or you have no income some or all of your NI allowance for that pay period is lost.  From what you say this is what happened here, your income for part of the year fell below the NI allowance so you lost this allowance, the result is that if you compare the NI you paid to the NI someone who earned the same as you but spread equally or thereabouts throughout the full tax year you will have paid more NI.

For example the threshold for NI (below which no NI is payable ) for 21/22 was £797 a month so anyone earning say £500 one month lost £297 of NI allowance.

Sammyf2970

Ah ok that sort of makes sense! I had just assumed it was done the same way as tax. Thank you! Every penny counts right now! 😀