My client has had a bill from HMRC for the Class 1 NIC (National Insurance Contributions) under deducted from their employee for the current and last 6 tax years.

Can my client recover any of the primary (employee) Class 1 NIC from their employee?

A limited recovery may be possible.

Social Security (Contributions) Regulations Schedule 4, paras 6 and 7 (SI 2001/1004)

This legislation only allows the employer to recover some underpayments of primary Class 1 NIC from their employee where the “the under-deduction occurred by reason of an error made by the employer in good faith” (paragraph 7(4)(a)).

The employer is then permitted by statute to double the employee’s primary Class 1 NIC until the end of the year following the year of assessment in which the error arose.


  • the employer can only make extra deductions to recover the primary Class 1 NIC from the employee in the remainder of the tax year that they made the mistake and the year after.
  • the employer cannot recover more than the amount of primary Class 1 NIC the employee owes in a month (so the employee pays no more than double their normal contribution).

For example, the employee is due to pay primary Class 1 NIC of £20 on their pay for this month. So, the maximum extra deduction the employer can make is £20.

This would be achieved by deducting the employee’s actual primary Class 1 NIC due for the month of e.g. £20.00. You would then deduct a further £20.00 from the employee’s net pay. The further £20.00 would be payment towards the Class 1 NIC recovery.

If the error was made on 30 April 2020. The employer would be able to make the extra deductions during the period from 1 May 2020 to 5 April 2022, or until the underpayment is recovered, whichever comes first.

Any remaining Class 1 NIC under deduction cannot be recovered from the employee and would be at the employer’s own expense.

The HMRC guidance can be found within the National Insurance Manual at NIM11534 and in paragraph 1.18.1 of the Employer Further Guide to PAYE & NIC (CWG2).

In association with Croner Taxwise

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