Recategorisation of earners for NIC

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Employment Tax

Guidance

Although it does not happen too often, there can be cases where an individual treated as an employed earner is actually self-employed, but there is a greater number of cases where a self-employed individual is recategorised as an employed earner. In an ideal world the change would take place from a current date and past periods would be ignored. Whilst the ideal outcome is achieved some of the time, there are also cases where HMRC seeks to collect arrears of Class 1 NIC and where employees and employers seek to recover the overpaid primary and secondary NIC. Much will depend on the amounts involved and the administration involved in rectifying matters.

Individual employed recategorised as self-employed for NIC

If matters are not simply rectified from a current date, there is a potential conflict in that the employer will want a refund of the Class 1 secondary NIC and the employee will want to offset the Class 1 primary NIC paid against the Class 2 and Class 4 NIC that are due.

Assuming

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