National Insurance Contributions Rebates?

jmartin_3

My husband has been self-employed for a number of years. He noticed that on a letter that came with his National Insurance bill there was the following note:

"Low earnings - you may be granted exception from payment if your earnings are low. If your net earnings from the current year are expected to be less than £4,635.00 you may not have to pay. However, you must apply for exception from payment."

My question is whether it is possible to claim a refund of some of the National Insurance paid in PAST YEARS, when his earnings were below the amount mentioned (in some years he actually made a loss, but still was paying all his NI contributions).

The current year isn't really relevant as we expect his earnings to be well above the amount they mention.

Any advice would be much appreciated!

Pennywise

You should be able to backdate a claim for the 2007/8 tax year as that is still within the timescale allowed. Going back any earlier would be at the NIC office's discretion as I don't think he has a "right" to a refund. The thing to do is download the form for 2007/8 and send the claim in, together with a letter explaining the position and outlining his profits/losses for earlier years and hope for the best!

Remember though, that the S/e NIC is a very small price to pay for the state benefits it entitles him to. It is only just over £2 per week. He will need a certain number of "years" to qualify for full state benefits (especially pension) - he can only have a certain number of years where NICs are not paid before his state benefits are reduced. In particular, he may not qualify for sick pay if he hasn't paid enough NICs in the preceding period.

On another point, as you say he made losses - did he properly claim tax relief on the losses, i.e. by reducing taxable profits in other years, and more importantly (and more often forgotten), did he claim relief for class 4 NICs which are linked to profits - people very often forget to make a claim to reduce profits for class 4 NICs if they have claimed tax relief losses in other ways. Definitely something to ask your accountant about just to make sure you havn't paid too much class 4 NICs as they don't affect state benefits at all - they're just another tax.