15 July 2026
HM Revenue and Customs (HMRC) has launched a consultation on proposals to align the recovery and repayment rules for National Insurance contributions (NICs) with those that already apply to Income Tax. The changes are intended to simplify the current system, reduce administrative burdens and create a more consistent compliance framework for employers, agents and HMRC.
Why is HMRC consulting?
At present, Income Tax and NICs operate under different recovery frameworks. For Income Tax, HMRC generally has between four and 20 years to assess liabilities, depending on taxpayer behaviour, but once an assessment has been made there is no time limit on debt recovery. In contrast, most NIC debts become unrecoverable after six years unless HMRC takes action to protect the debt through the courts or enters into a standstill agreement with the employer.
HMRC believes these differences create unnecessary complexity, particularly where a compliance review results in both PAYE Income Tax and Class 1 NIC liabilities arising from the same underlying issue.
What changes are proposed?
The consultation proposes several significant reforms:
- removing NICs from the scope of the Limitation Act 1980 and equivalent Northern Ireland legislation
- introducing a new statutory Notice of NICs Liability
- aligning NIC recovery time limits with those that apply to Income Tax
- aligning NIC repayment time limits with Income Tax repayment rules.
Under the proposals, HMRC would issue a Notice of NICs Liability within statutory time limits, which would generally mirror Income Tax rules:
- four years where reasonable care has been taken
- six years where errors are careless
- 20 years where errors are deliberate
- 12 years for certain offshore matters.
Once a Notice of NICs Liability has been issued, HMRC would no longer be restricted by the current six-year recovery time limit.
Changes to repayment claims
The consultation also proposes reducing the time limit for claims relating to overpaid NICs from six years to four years, bringing it into line with Income Tax repayment claims. HMRC believes four years provides sufficient time for taxpayers to identify and correct errors while simplifying the overall framework.
What could this mean for employers?
The proposals do not affect NIC rates, thresholds or calculation methods. Instead, they focus on how NIC liabilities are assessed, recovered and repaid.
For employers, the changes could bring some welcome simplification by reducing differences between PAYE Income Tax and NIC compliance processes. This may make HMRC enquiries easier to manage and provide greater consistency in enforcement procedures.
However, employers should also be aware that:
- HMRC may be able to pursue historic NIC liabilities under a framework more closely aligned with Income Tax assessments
- claims for overpaid NICs could be restricted to a four-year period instead of six years
- a new Notice of NICs Liability could become the primary mechanism for creating an enforceable NIC debt.
The consultation is open until 12 October 2026, and HMRC is seeking views from employers, payroll professionals, tax advisers, representative bodies and others before deciding whether to proceed with the reforms.
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