The international rules for National Insurance are very
different from the international rules for income tax. NICs rules
are driven by treaty and wider social policy considerations which
do not impinge on income tax. Therefore, the new rules providing
for the apportionment of specific employment income under Part 7 of
ITEPA 2003 for income tax and PAYE purposes do not apply for the
purposes of NICs. Instead, the NICs rules are
subject to their own provisions relating to
internationally mobile employees within the UK legislation and/or
international social security agreements.
For guidance on how the NICs rules apply to
employment-related securities in general, see
ERSM170700.
NICs liability on earnings from employment-related
securities is based on the inclusion as earnings of the
straightforward acquisition of securities by an employee from his
employer (provided the securities are readily convertible assets)
and, in addition, anything which counts as employment income under
the charging provisions of Part 7 of ITEPA 2003. For employees who
are resident but not ordinarily resident some gains on
employment-related securities which previously would have counted
as employment income only by virtue of Chapter 3C of Part 7 or
which may not have counted as employment income at all, will, under
the new rules, count as employment income under, for example,
Chapters 2 or 5 of Part 7.
Section 3(1) of the Social Security Contributions and
Benefits Act 1992 defines earnings as including any remuneration or
profit derived from an employment. Section 4(4)(a) treats as
remuneration derived from an employed earner’s employment,
for the purposes of section 3, an amount which counts as employment
income by virtue of Chapter 5 of Part 7 of ITEPA.
Regulation 22(7)(a) of the Social Security (Contributions)
Regulations 2001 also treats as remuneration derived from an
employed earner’s employment, for the purposes of section 3,
an amount which counts as employment income by virtue of Chapters 2
to 4A of Part 7 of ITEPA 2003 and regulation 22(7)(b) adds a second
condition that ITEPA03/S698 applies. A NICs liability therefore
arises where section 698 applies but section 698 itself does not
determine the amount of earnings, this is already established by
regulation 22(7)(a). In addition, Schedule 2 to SSCR 2001 sets out
the rules on the calculation of earnings and, in particular,
paragraph 7 also makes it clear that the amount of any earnings
comprised in any payment by way of the conferment of
are calculated in same manner and at the same time as applies
under Chapters 1 to 5 of Part 7 of ITEPA 2003 for the purposes of
computing employment income.
SSCBA92/S6 then goes on to impose a Class 1 contribution
liability where, in any tax week, earnings are paid to or for the
benefit of an earner.
