Aligning recovery time limits of NICs with Income Tax

The purpose of the consultation is to simplify the administration of National Insurance Contributions (NICs) by aligning their assessment and recovery time limits with those that already apply to Income Tax.

• Currently, there are differences between the two systems, which can create complexity for both HMRC and taxpayers. 
• By aligning the rules, HMRC aim to improve consistency, reduce confusion and ensure a more coherent compliance framework. 

At present, HMRC operate under different statutory rules for Income Tax and NICs when it comes to how far back they can go to assess liabilities and recover underpaid amounts.

• For Income Tax, the time limits are based on a taxpayer's behaviour, for example, whether an error was careless or deliberate.
• For NICs, the rules are generally more limited and less flexible. The collection of NIC debts is normally subject to the six-year time limit under the Limitation Act 1980 and Limitation (Northern Ireland) Order 1989. 
• This can result in situations where HMRC can pursue Income Tax but not NICs for the same infringement. 

The main proposal is therefore to remove NICs from the scope of the Limitation Acts and apply Income Tax time limits to NICs.

• This would introduce behaviour-based time limits for NICs similar to those used for Income Tax.

In broad terms, this means:

• A four-year time limit where no careless or deliberate behaviour is involved. 
• A six-year time limit when an underpayment is due to careless behaviour.
• A 20-year time limit where the loss of NICs arises from deliberate behaviour. 

These changes would allow HMRC to pursue NICs over the same periods as Income Tax when similar circumstances apply.

• This is intended to ensure fairness and consistency across the tax system.

The consultation also considers how these aligned time limits would work in practice. This includes:

• Applying the new limits to different classes of NICs, including Class 1 (employees and employers) and Class 4 (self-employed).
• Ensuring that the rules integrate with existing compliance processes, such as PAYE and Self Assessment. 
• Considering how penalties and compliance checks would operate alongside the revised time limits. 
• Providing clear guidance so that taxpayers and agents understand how the new system works. 

Overall, the proposals are intended to create a single, coherent approach to time limits for both Income Tax and NICs.

• By aligning the rules, HMRC aim to reduce complexity, support compliance and make it easier for taxpayers to understand their obligations. 

The consultation closes on 12 October 2026. Responses can be made by email or by post. 

Useful guides on this topic

Time limits for tax assessments, claims and refunds
What are the time limits for claiming a tax refund? How far can HMRC go back and raise an assessment? How many years back can a taxpayer appeal? What are the time limits for correcting a tax return?

Discovery Assessments
When can HMRC issue an assessment outside of the normal statutory time limits? What conditions must be met? Can HMRC issue two alternative assessments for the same period? What are your rights of appeal and defences?

Recovery of PAYE: Regulation 80 and 72 assessments for PAYE
When can HMRC assess an employer or an employee for unpaid Pay As You Earn (PAYE) and National Insurance Contributions (NICs)? What is a regulation 80 determination? What is a regulation 72 determination? Who is assessed? What are the conditions?

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Aligning the time limits for recovery of NICs with Income Tax

Question 1: To what extent do you consider that the current differences between NICs and PAYE income tax recovery processes create administrative complexity?

Question 2: Do you agree that HMRC should introduce a statutory Notice of NICs Liability and align the time limits for the collection of NICs debts with those for income tax?

Question 3: Do you anticipate any disadvantages to the route of appeal for the Notice of NICs Liability being to appeal the associated Section 8 decision, rather than a right of appeal being directly linked to the Notice itself?

Question 4: Do you see any administrative difficulties arising from aligning the time limit for NICs repayments with those given in the TMA?

Question 5: Do these proposals have any specific disadvantages or unintended consequences for taxpayers, aside from the reduced repayment period for NICs paid in error?

Question 6: Do you agree that the Section 8 process should be simplified, and if so, which aspects of the current framework do you find add the most complexity?

Question 7: Are there further improvements the government could make to NICs debt recovery processes?