Areas of the library:
  • Disguised Remuneration - draft National Insurance contributions regulations

Disguised Remuneration - draft National Insurance contributions regulations

These regulations make provision for amounts chargeable to income tax under 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 National Insurance contributions (NICs) if they would not already be earnings for NICs purposes. They include provision to prevent a double liability for NICs on such amounts.

Where these regulations apply ordinary NICs principles will apply to the collection of NICs. As a consequence there will be two aspects of the income tax treatment of amounts chargeable under Part 7A which will not be fully aligned with the corresponding NICs treatment:

  • Amounts deriving from duties of an employment performed overseas or with an overseas employer and chargeable to income tax on the remittance basis by virtue of sections 554Z9 or 554Z10 ITEPA will be liable to Class 1 NICs on the value of the relevant step when it is taken.
  • Amounts chargeable under Chapter 2 of Part 7A which subsequently attract income tax relief under section 554Z14 (relief where earmarking is not followed by a later relevant step) will not attract corresponding NICs relief.

HM Revenue & Customs (HMRC) have published draft regulations for comment and these can be accessed from the link below.

Draft regulations - Disguised remuneration (PDF 26K)

Explanatory Memorandum to the disguised remuneration draft regulations (PDF 27K)

If you have any questions or comments about any of these draft regulations, please email these to PA Harris by Friday 23 September 2011, or write to:

HM Revenue & Customs
Employment Income Policy Team
Room 1E/07
100 Parliament Street
London SW1A 2BQ

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