Could you reclaim Class 4 National Insurance (NI)?

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:

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.