National Insurance Holiday Scheme
Customer Information Notice
On 18 February 2025, the Minister for the Treasury, the Hon. Dr A Allinson, MHK, announced that from 6 April 2025 the Scheme would only apply to students returning to the Island once they have completed their studies.
The Scheme will therefore be ending for new residents. Any new resident who started work on or before 5 April 2025 will still be able to apply providing they meet the other conditions.
We are currently processing applications over a 16-week period. This means you may not hear from us again regarding your claim until this time has elapsed. When we receive your claim, you will be notified that it has been received and we will process your claim as quickly as possible. Please note it is important that you have provided the full documentation, failure to supply these could lead to further delays in your application being processed.
From 6 April 2025 the National Insurance Holiday Scheme only applies to students who return to work on the Island. Various qualifying conditions apply.
Full details are available in the Practice Note 207-19 and on the application forms R247 (NR) – Application for the National Insurance Holiday Scheme (New Resident) and R247 (RS) – Application for the National Insurance Holiday Scheme (Returning Student) in the National Insurance section of our Forms page.
New Residents
The Scheme only applies to new residents who:
- took up tax residence in the Island on or after 6 April 2019 and before 5 April 2025
- started permanent employment within 12 months of arriving on the Island and on or before 5 April 2025
- are undertaking their employment in the Island
- have a minimum annual gross remuneration of £23,000 and
- have not been resident on the Island for tax purposes at any time in the five tax years immediately preceding that in which they took up residence
To qualify for a refund, the person must remain in employment for a period of more than 12 consecutive months. The person is only entitled to one refund.
In addition, the employer must be Isle of Man resident for National Insurance purposes.
Permanent employment is an employment relationship which is expected to be continuing and has no predetermined end date.
A person who meets the requirements of the scheme will be able to apply for a refund of their Class 1 National Insurance contributions paid as an employee during the relevant 12 months of their permanent employment in the Isle of Man up to a maximum of £4,400. Contributions refunded under the scheme will still be treated as paid for all other purposes.
Returning Students
The Scheme applies to Isle of Man students who:
- on or after 6 April 2019, successfully completes a full time course of education outside the Island for a university first degree, a Higher National Diploma (or comparable course) or a postgraduate course and who, after completing that course, returns to the Island to live and work and
- commence permanent employment within 5 years of successfully completing their course
The graduation date has to be after 6 April 2019. Students who graduate prior to that date but do not return to the Isle of Man until after 6th April 2019 will not qualify for a refund.
The Scheme does not apply to students who have undertaken a course of distance learning or flexible learning.
Students at the Isle of Man University College will not qualify for a refund.
To qualify for a refund, the person must remain in employment for a period of more than 12 consecutive months. The person is only entitled to one refund.
In addition, the employer must be Isle of Man resident for National Insurance purposes.
Permanent employment is an employment relationship which is expected to be continuing and has no predetermined end date.
A person who meets the requirements of the scheme will be able to apply for a refund of their Class 1 National Insurance contributions paid as an employee during the relevant 12 months of their permanent employment in the Isle of Man up to a maximum of £4,400. Contributions refunded under the scheme will still be treated as paid for all other purposes.
What is permanent employment
Permanent employment is an employment relationship which is expected to be continuing and has no predetermined end date.
Documentary evidence
The application should be made after the end of the 12 months to which the claim applies, but not later than six months after that date.
Example
New resident arrived on the Island on 31 March 2023 and commenced work on 3 April 2023 and continues to be employed. They can make their application in April 2024 but no later than September 2024.
Additional evidence
Copies of the relevant contract of employment, pay slips and documentary evidence of the Educational courses completed should be submitted with the application.
As a new resident you may be asked to provide proof of when you commenced residence such as providing copies of your travel documents, rental agreements or other similar documents to evidence when you arrived on the Island.
If you arrived part way through a tax year
If you arrived part way through a tax year, only one claim is necessary. The National Insurance refund can apply to two separate tax years depending on the date of application.
Applying for a refund
To apply for a refund please complete either form R247 (NR) – Application for the National Insurance Holiday Scheme (New Resident) or R247 (RS) – Application for the National Insurance Holiday Scheme (Returning Student) as applicable - both forms are available to download from the National Insurance section of our Forms page. The form should be submitted to the Income Tax Division.
Please note that early submission, before 12 months of employment, will not be accepted.
An employee to whom the scheme applies and whose employment meets the set conditions can apply to the Income Tax Division for a refund of the Class 1 National Insurance contributions they pay as an employee during the first 12 months of their employment up to a maximum of £4,400.
Where the person making the claim or a person connected to them has control over the employer either as a director or in another capacity, it will also be a requirement for the employer to be up-to-date with all Class 1 National Insurance contribution payments and all payments of Income Tax Instalment Payments in order for a refund to be made to the employee.
Amount refundable
You will receive the full amount refundable unless you have an outstanding liability to Income Tax or National Insurance at the time of making the claim in which case the refund will be offset against that liability first before any remaining amount is refunded.
