Muras Matters: National Insurance Contributions Deferral

Background

There is a limit on Class 1 National Insurance contributions (NIC) employees with more than one job have to pay. To avoid paying too much National Insurance over the tax year employees with more than one job may be allowed to defer paying Class 1 NIC on their other jobs. If allowed to defer NI payments, an employee will pay a reduced rate of NIC on some of their earnings.

Employees must apply to HM Revenue & Customs (HMRC) for NIC deferral and for the current tax year ending 5 April the deadline for deferral applications is 14 February 2025. Deferral claims do not rollover into the next tax year and so a deferral claim must be submitted each year to HMRC, normally by 14 February for the relevant tax year.

Detail

Employees are required to pay Class 1 NIC on their employment income with more than one employer and where they earn over a certain amount. Employees with more than one employment however can apply to HMRC to defer paying Class 1 NIC on their other jobs.

To qualify for the deferral of NIC an employee with more than one job must earn:

  • £967 or more per week from one job
  • £242 or more per week in their second job.

If an employee has more than 2 jobs, in order to apply for NIC deferral over the tax year they will need to earn:

  • £1,209 or more per week from 2 of those jobs
  • £242 or more per week in their other jobs.

If allowed by HMRC to defer NIC payments, an employee will pay a reduced rate of 2% on their weekly earnings between £242 and £967. They will pay this reduced rate instead of the standard rate, currently 8%, in one of their jobs, or multiple jobs if they have more than 2. Any underpaid NIC as a result of a deferral will be payable by employee at the end of the tax year.

An application to defer NIC must be made by the employee on form CA72A, normally by 14 February for the relevant tax year, unless the employer agrees otherwise. There is also an online service to defer payment of Class 1 NICs (CA72A) for which a Government Gateway user ID is required, although one can be set up as part of the application process. The online service or the downloadable version of Form CA72A can be accessed via the following link – Defer payment of Class 1 NIC (CA72A).

For the tax year 6 April 2024 to 5 April 2025 HMRC must receive an application by the 14 February 2025 in order to consider any deferral.

HMRC will then consider the application and may request copies of payslips.

If HMRC accept the deferral application they will inform the employee which employer (their main employer) they will pay Class 1 NIC at the normal rates with and which employers they will pay at the reduced rate of 2% with. HMRC will send the relevant employers a ‘certificate of deferment’ informing them to deduct Class 1 NIC at the reduced rate. HMRC will not provide the individual’s employers with any information regarding their other jobs.

If an employee is not allowed to defer their NIC then HMRC will write to inform them why.

If an individual’s circumstances change, for example any job ends, they start another job or move home then they must inform HMRC in order to ensure they pay the correct rate of NIC on all their jobs.

At the end of the tax year HMRC will check if the correct amount of NIC has been paid and will write to the employee if they owe anything.

The NIC deferral does not automatically renew for the next tax year, but if appropriate, HMRC should invite the individual to renew their deferment before the start of the next tax year.

If you would like further information the deferral of Class 1 NIC or any assistance in making a deferral application, please contact our Tax Director, Jenny Marks.

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