National Insurance contributions Regulations
Regulations have been published today to charge Class 1 National Insurance contributions (NICs) on amounts chargeable to tax under the recently introduced Disguised Remuneration measure.
The Regulations make provision for amounts chargeable to income tax under the Disguised Remuneration legislation in Chapter 2 of Part 7A of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003) to be treated as earnings for the purposes of NICs if they would not already be earnings for NICs purposes. They include provision to prevent a double liability for NICs on such amounts.
The Regulations will come into force on 6 December 2011. Employers will need to account for Class 1 primary (employee) and secondary (employer) NICs on amounts which count as employment income under Chapter 2 of Part 7A on or after that date, except where the Part 7A charge arises on 6 April 2012 in relation to an ‘early step’ which took place between 9 December 2010 and 5 April 2011. Guidance on the Part 7A treatment of early steps can be found in the Employment Income Manual starting at EIM45905.
The Regulations do not have retrospective effect so where there is no prior liability to account for Class 1 NICs, employers do not need to account for Class 1 NICs on any Part 7A amounts which have given rise to tax liabilities before 6 December 2011 and which have, or will be, subject to PAYE.
The National Insurance Manual will be updated in due course to reflect the changes introduced by these Regulations.
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