Employer paying PILON > HOW to get back overpaid NI ?

SChitmehard

Hi,

My friend left employment 12 months ago but employer owned him money which amounts to £8,000 as he is entitled to 3 months PILON. Employer will pay this in February or March this year as a lump sum of £6,000 after making  deduction of NI and tax before payment is made. 

He has been on JSA (contributions based) for a few months and will be unemployed for a few months yet, maybe until April/May so he should be able to claim back tax as he has no earnings (besides JSA) for the past 12 months to April 2023.

The JSA means they also pay his NI contributions so there will be an overpayment of NI.

 Can he claim back NI (as with tax above?)

Thanks,

penners324

Unfortunately not only the paye element 

calcotti

He cannot reclaim NI. It’s calculated weekly or monthly.

SChitmehard

Is there any way he Can use the overpayment of NI to cover for any missing payments in the current fiscal year as there was a period of 2 months last year where he wasn't working or claiming JSA/other benefits?

If so will NI people do this automatically or does he have to do something/write to them?

 penners324 said:

Unfortunately not only the paye element 

calcotti said:

He cannot reclaim NI. It’s calculated weekly or monthly.

[Deleted User]

There is no overpayment of NI. 

This only occurs in exceptional  situations e.g. two jobs where excessive amount paid at 12% rate. Even then it can’t be allocated to another tax year and is refunded. 

SiliconChip

Your friend will actually pay less NI on a lump sum than they would if it has been paid as monthly salary over several months. Around half of the £8,000 will attract a NI rate of 2% rather than the 12% that would be due otherwise, so they're probably about £450 better off.