NIM09800 - Earnings periods: reallocating NICs for benefit purposes: general

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

Regulation 58 has two parts: 58(1) and 58(2). Each part caters for a particular situation. Regulation 58(1) is discussed at NIM09810 and regulation 58(2) at NIM09820.

Where Regulation 58(1) or 58(2) apply then these regulaions will assist individuals whose short or long term benefit entitlement is jeopardised because of reasons beyond their control. Regulation 58(2) allows for Class 1 NICs paid in one tax year to be reallocated to another tax year for benefit purposes. When considering reallocation under this regulation, it is important to remember the following points:

  1. NIC can only be reallocated for benefit purposes. If reallocation will not help the employee, do not consider it;
  2. NIC can be reallocated even if the employee has not made a claim to benefit;
  3. Employees cannot be expected to know about the existence of Regulation 58. If reallocation would help the employee, its provisions should be explained;
  4. If the employee wants NICs to be reallocated, ask them to sign a declaration which indicates that they understand the consequence, that reallocated NICs can never be put back to the original tax year. For example, NIC reallocated from the 2020 to 2021 tax year to the 2019 to 2020 tax year will only count towards benefit as 2019 to 2020 tax year NIC and cannot then count towards benefit as 2020 to 2021 tax year NICs;
  5. If reallocation makes the later tax year (in this example, the 2020 to 2021 tax year) deficient for long term benefit purposes, invite the employee to pay sufficient Class 3 NICs to remove the deficiency (see NIM25000CO). These will be treated as paid timeously if paid within one month of the invitation.