NIM18050 - Class 1B NICs : Liability : General
Procedure
Class 1B NICs operate within the confines of the PSA procedures
operated for tax purposes (see
NIM18010). The procedures are
- employers will contact their local PAYE
Tax Office and indicate a wish to operate a PSA.
- the tax inspector and the employer will
determine which expenses and benefits will be covered by the PSA
for a particular tax year and will sign a formal agreement to that
effect (form P626). The agreement can be signed before, during, or
for benefits, after the tax year in question as long as it is
signed by 6 July.
- the employer will identify those items
which would normally give rise to a Class 1 or Class 1A NICs
liability and note that Class 1 and Class 1A NICs will no longer
apply to those items.
- after 6 July in the tax year following the
year to which the PSA relates, the employer and the tax inspector
will together determine the tax payable under the PSA . The
employer will provide all relevant documentation in support of the
emoluments covered by the PSA in order to reach agreement of the
tax due.
- once the amount of the tax payable has
been agreed, the employer will also agree the Class 1B liability
with the inspector, based upon the tax payable and the value of the
items which would otherwise have been liable for Class 1 or Class
1A NICs (see
NIM18060).
- Network staff will then issue
- a ‘Notice to Pay’, form P630,
detailing the amount of tax payable, and
- a payment slip.
- the employer will calculate the total
Class 1B NICs and tax due, and send the payment together with the
payment slip to the Collector of Taxes.
