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NIM09840 | Earnings periods: reallocating NICs for benefit purposes: payment not mistimed

From HM Revenue & Customs · National Insurance Manual

Regulation 58(2) of the Social Security Contributions Regulations (2001) (SI 2001 No 1004)

Where Regulation 58(2) could apply obtain the following information:

  • details of NICs paid and credits awarded in the earlier tax year, and

  • the earnings, and the NICs paid on those earnings, received by the employee at the end of the first earnings period in the tax year (that is the earnings which relate to March of the earlier tax year plus those earnings for April of the following tax year). This is because all of the earnings, and the NICs paid on those earnings, for the first earnings period in the following tax year are to be reallocated, not just a portion of them.

When you hold this information, obtain answers to the following questions (if necessary by seeking the advice of Department for Work and Pensions (DWP)):

  • Will reallocation to the earlier tax year enable the person to gain benefit entitlement?

  • Will reallocation in turn make the later tax year deficient for benefit purposes?

If reallocation will not help the contributor to gain benefit entitlement, explain to them that the provisions of Regulation 58 cannot be applied.

If reallocation will help the contributor to gain benefit entitlement, take the action set out in operational guidance.

Most reallocation cases will come to light when a claim to short-term benefit is disallowed by DWP. For example, a contributor finds that their record is deficient and enquires about a reallocation of NICs. HMRC will try to resolve these cases but must consider further if:

  • there is doubt about the assessment of NICs; or

  • there is doubt about the liability for NICs; or

  • the contributor does not accept that reallocation is not appropriate.

Cases of this type will be very few and far between, but if one is received follow the operational guidance and make appropriate enquiries. If necessary contact the employer and when a conclusion has been reached, inform the contributor of the outcome.