Are You Paying Too Much National Insurance?

Worried you’re paying too much National Insurance? Read on to find out.

There is what’s called an ”annual maximum” of national insurance contributions applying to every individual in a tax year. The most common scenario of an individual paying too much national insurance arises when they are working two or more jobs. It even applies to earners who are both employed and self-employed, thus potentially paying National Insurance Classes 1, 2 and 4.

Should an earner have sizeable earnings this could add up to a substantial amount of NIC paid each year. There is, therefore, a maximum limit which applies. Here is an illustration of how this works:

Charlotte had two employments during the 2017/18 tax year: a salary of £50,000 from working at Peace Hospital as a consultant and £45,000 from her consultancy work at Love hospital.

During the 2017/18 tax year, Charlotte paid Class 1 NIC of £4,520 on her salary from Peace, and Class 1 NIC of £4,420 on her salary from Love. In total, that’s £8,940 being paid. When comparing this to the Annual Maximum, which is calculated as £5,331, it results in a National Insurance repayment being due of £3,609 – not an immaterial sum by any means.

If you believe you’ve paid too much National Insurance, the first port of call is always to contact your employer. They may be able to refund you using their payroll system. Alternatively, a claim can be made directly to HMRC providing the necessary information is detailed.

If the circumstances are a one-off, and it’s simply a case of requesting repayment for one specific tax year then that’s all that is required. However, should the circumstances remain broadly the same in future tax years then a claim for Deferment of NIC can be made. This simply means you would only pay National Insurance at 2% – above a certain threshold – rather 12% on one of your employments. HMRC would then have to grant the claim and would determine which of the employments this would apply to.

National Insurance: Are you paying too much? 

The amount of National Insurance you pay depends on your employment status and how much you earn.

There are instances in which you could have overpaid your National Insurance contributions (NIC), for example, if you have paid National Insurance after reaching the state pension age, if you are highly paid and have more than one job, or if you are employed and self-employed and earning a lot of money.

How to know if you are paying too much National Insurance

There is what’s called an ”annual maximum” of National Insurance contributions applying to every individual in a tax year. 

The most common scenario of an individual paying too much National Insurance arises when they are working two or more jobs. It even applies to earners who are both employed and self-employed, thus potentially paying National Insurance Classes 1, 2 and 4.

Should you have sizeable earnings, this could add up to a substantial amount of NIC paid each year. There is, therefore, a maximum limit which applies. Here is an illustration of how this works:

Charlotte had two employments during the 2024/25 tax year: a salary of £60,000 from working at Peace Hospital as a consultant and £50,270 from her consultancy work at Love hospital.

During the 2024/25 tax year, Charlotte paid Class 1 NIC of £3,016 on her salary from Peace, and Class 1 NIC of £3,210 on her salary from Love. In total, that’s £6,226 being paid. When comparing this to the Annual Maximum, which is calculated as £4,008 it results in a National Insurance repayment being due of £2,218 – not an immaterial sum by any means.

If the circumstances are a one-off, and it’s simply a case of requesting repayment for one specific tax year then that’s all that is required. However, should the circumstances remain broadly the same in future tax years then a claim for Deferment of NIC can be made. This simply means you would only pay National Insurance at 2% – above a certain threshold – rather 8% on one of your employments. HMRC would then have to grant the claim and would determine which of the employments this would apply to.

If you believe you’ve paid too much National Insurance, the first port of call is always to contact your employer. They may be able to refund you using their payroll system. Alternatively, a claim can be made directly to HMRC providing the necessary information is detailed. If you are unsure about your National Insurance payments and would like to speak to an expert, please get in touch.