Rules for a National Insurance refund

scoatesworth

I recently applied for a National Insurance refund, believing I had overpaid, but I have had my claim refused. My claim was for 2022/23. 

I had been working part-time for an employer paying tax/NI through PAYE monthly. 

In April 2022 I received backpay and overtime I was owed from the previous years employment which bumped up that months salary to around three times its normal amount. Not unexpectedly, I paid a much larger amount of income tax and NI that month.  What I then expected to happen was that the PAYE system would kick in and I would then pay a reduced amount of tax and NI in the following months to a point where I would be back to paying a normal amount per month.

This seemed to happen for income tax but not for the National Insurance.  At the end of the year I asked my employer about it and was fobbed off and told the tax office would refund me - it never did so recently I wrote to HMRC to ask for a refund but I have been turned down.

Can anyone explain to my why I wasn't due a refund?  This is what HMRC said

"Unlike Income Tax, your employer does not work out the amount of National Insurance contributions to take off using your annual earnings figure. lnstead, they work them out in line with the Pay As You Earn system, on either a weekly, four-weekly or monthly basis"

This seems weird - why do they quote NI rates/bands per year.  This means that in extremis if you worked for the month of April only, in say 2022/23, and earned £5000, you would pay National Insurance (of about £500 I think) even though you never earned over the Lower Earnings Limit (LEL) for that year. And you couldn't claim it back!

BoGoF

The HMRC explanation sums it up I'm afraid. Tax and NIC legislation are different and NIC is not cumulative like tax allowances. They quote weekly etc rates for NIC thresholds as some people themselves on that frequency.

[Deleted User]

There are few instances where a National Insurance overpayment can occur. One would be in the situation where too much was paid at the higher rate. 

This can occur where one has two employments or a mix of employed and self-employed income. 

For example - two jobs each paying £50000 per annum. The higher rate would be operated on both if no deferment application was made on one. An application for a refund of the amount paid in excess of the higher rate maximum can be made.