Dear
[A] At a recent visit to you an officer of this Department
found that the earnings of [D or E] ………….
are paid regularly but at intervals of different length. The
officer also found that the greater part of the earnings are paid
at the longer interval but that you are calculating National
Insurance contributions (NICs) using an earnings period which
reflects the shorter interval.
[B] You recently asked this Department to consider whether
the earnings period of [D or E] should be changed because the
earnings are paid regularly but at intervals of different length
and the greater part of the earnings are paid at the longer
interval.
[C] Your employee [D]…….. recently asked this
Department to consider whether the earnings period applied to
his/her earnings should be changed because the earnings are paid
regularly but at intervals of different length and the greater part
of the earnings are paid at the longer interval.
Although NICs are being assessed in accordance with Social
Security legislation, the long term effect of such a pay practice
is that the earnings are subject to less NICs than would be due if
all of the earnings were paid over the longer interval. Where such
instances occur this Department is able to notify you, under
regulation 3(2B) of the Social Security (Contributions) Regulations
2001, that for the purposes of calculating the amount of NICs due
the earnings period to be applied should be that of the longer or
longest interval.
The purpose of this letter is to explain that, in order to
ensure that the amount of NICs due is proportionate to the total
earnings paid, it is our intention to issue a decision which gives
you notice to change the earnings period to the longer pay
interval. This means that with effect from [F]
…………………. you should
calculate NICs using a [G]……………
earnings period for [D or E]. Those earnings that are paid at the
shorter interval should be aggregated with the earnings paid at the
longer interval and NICs calculated on the total figure.
You will receive this decision in 30 days. In the meantime,
if you think there are any reasons why the earnings period should
not be changed, please let me know as soon as possible.
A similar letter has been sent to [D or E].
Notes Explanation
[A] Use this paragraph if the case originated internally
[B] Use this paragraph if the employer has requested a
regulation 3(2B) decision
[C] Use this paragraph if the employee has requested a
regulation 3(2B) decision
[D] insert the name of the employee
[E] Use ‘the employees on the enclosed list’ if
more than one employee is involved
[F] Insert operative date
[G] Insert earnings period to be applied, eg monthly,
quarterly
