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Individuals who are both employed and self-employed may be due a refund for overpaid National Insurance (NI). This is not automatic and individuals should therefore consider whether a claim is appropriate, which could go back without time limit.

NI is charged at different rates depending on an individual’s employment status and total earnings. For the 2015/16 tax year, the rates are as follows:

Income Level
Employed (Class 1)
Self-employed (Class 4)
£0 - £8,060 0% 0%
£8,060 - £42,385 12% (10.6% if contracted out) 9%
£42,385 + 2% 2%

During a tax year an individual may be both employed and self-employed. This could be, for example, a sole trader or partner in a partnership securing an employment contact one day a week with an external employer, or an employee who has a sole trade business that he or she may run in their spare time.

In order to see if you qualify for a refund, you should ask yourselves the following key questions:

  • Were you employed and self-employed during a tax year?
  • Did your total earnings exceed £42,385?
  • Are you under state pension age and pay NI?
  • Have you previously applied for a refund of overpaid NI?

 

Under normal tax rules, the maximum number of years that HMRC will adjust a taxpayer’s calculation in their favour is 4 tax years. However, there is a specific provision in legislation allowing refunds for Class 4 NI to be backdated indefinitely, meaning that potentially substantial refunds may be due.

If you think that the above may apply to you and that you may be due a refund of overpaid contributions, please get in touch with our specialist advisers who will be able to consider a potential claim further.

author

Ceri Lewis

Ceri joined Shorts in January 2015, bringing 28 years’ experience of advising clients within the Healthcare sector and a particular specialism in GP Practices. She specialises in the provision of accounting, tax planning and advisory services to the healthcare industry and was actively involved in the creation and development of AISMA, (The Association of Independent Specialist Medical Accountants) in 1995. Ceri’s appointment as Healthcare Director, was a direct response to growth within the firm, and Shorts’ continued commitment to providing clients with the very best advice and service, helping them achieve their business and personal objectives in the most tax efficient manner.

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