NIM22002 - Class 2 National Insurance Contributions: Small Earnings Exception refunds: Time limits

Regulation 47 of the Social Security (Contributions) Regulations 2001 (SI 2001 No. 1004)

If a self-employed contributor had paid Class 2 National Insurance contributions (NICs) for a year in which they satisfied the conditions for Small Earnings Exception (SEE) (see NIM21001), then a refund of the NICs could be made for that year or any part of that year, subject to the following:

• refunds could only be made for periods from and including 6 April 1988,
• applications had to be made on or before 31 January following the end of the tax year for which the refund was claimed. This time limit could not be extended, and
• applications had to be made in writing and evidence of earnings provided (see NIM22003). If a contributor asked for a refund within a current year they had to re-apply and submit evidence of earnings after the end of the tax year but on or before the following 31January.

It was not always be in a person’s best interests to obtain a refund of Class 2 NICs on the grounds of low earnings and they had to be advised about the benefit implications.

If an application was successful:

• the applicant was excepted from liability for the relevant period,
• a refund of the NICs was made, and
• a certificate of exception was issued for the period covered by the refund.

If contributory benefits had been paid to the self-employed person or to anyone else based on the original Class 2 NICs, the amount of the refund had to be reduced by the amount of benefit paid.

HMRC’s Self-employment Services dealt with this type of Class 2 refund and advice on the application of the time limits could be obtained from them.