In Christine Bradley v HMRC [2021] TC08344, the First Tier Tribunal (FTT) found that Class 3 National Insurance Contributions (NICs) paid in error should be refunded by HMRC.

  • Ms Bradley was in employment for a number of years until 2015. On leaving employment at age 46, she had made 29 years of National Insurance Contributions (NICs). 35 years were needed to be entitled to a full state pension.
  • After leaving employment, Ms Bradley had no income and due to anxiety could not engage mentally with the prospect of getting a new job.
  • After contacting HMRC, in March 2017 Ms Bradley paid £733.20 in voluntary Class 3 NICs in respect of 2016-17. No advice was sought nor was any discussion undertaken with friends or family as to whether it was sensible to make the voluntary contribution.
  • Ms Bradley commenced self-employment in April 2018. This allowed voluntary Class 2 NICs to be paid, as profits were below the small profits threshold.
  • In April 2018 and May 2019 Ms Bradley wrote to HMRC requesting that the Class 3 NICs contribution made in 2017 be refunded or reallocated to 2017-18 and 2018-19 as Class 2 NICs. HMRC refused this request.
  • Ms Bradley appealed to the First Tier Tribunal (FTT).

Individuals may pay voluntary Class 3 NICs to enhance entitlement to benefits such as the state pension. Payments must be refunded where they do not enhance the contributor’s entitlement to benefit at the time of payment.

Where contributions have benefited the contributor, an application for repayment can be made where the contribution was made as a consequence of an error. This does not extend to a change of heart or the benefit of hindsight.

The FTT allowed Ms Bradley’s appeal for repayment of the Class 3 NICs paid, finding that Ms Bradley:

  • Was entitled to make the payment of Class 3 NICs and it contributed to her entitlement to benefit. As a result, it was not automatically repayable.
  • Suffered from extreme anxiety after leaving employment which resulted in an error of judgement.
    • Ms Bradley had an unsubstantiated belief that she would never be able to work again. Rationally, she only needed to work for six years in the 20 before she reached retirement age to obtain a full state pension.
  • Had made a mistake of fact in concluding that only by paying the Class 3 contributions immediately would she become entitled to a full state pension.

As an error was made at the time of paying the Class 3 NICs, the FTT found that repayment should be made by HMRC under Regulation 52 of the Social Security (Contributions) Regulations 2001.

Useful guides on this topic

National Insurance: What's the maximum payable?
How are National Insurance Contributions (NICs) limited? What is the maximum payable? What different rules apply to employment and self-employment income? 

National Insurance: Rates
What are the current, past and proposed future rates of National Insurance? 

Increases to National Insurance Rates
The government has announced its plan for funding the NHS and social care sector. This will include a new Health & Social Care Levy which will be delivered by a raise in Class 1 and Class 4 National Insurance Contributions (NICs) of 1.25%.

External link

Christine Bradley v HMRC [2021] TC08344

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