PAYE28035 - employer records: modified PAYE schemes: reserve and auxiliary forces

A serving member of the forces is treated as an employed earner and present in the UK even if he is serving overseas.

All taxable earnings are subject to a modified form of PAYE. The main features are

• Code BR is operated unless the use of code NT is approved
• Coding is not cumulative
• Notifications of starting and leaving are not issued
• Computer records are kept only for reservists for whom code NT is issued. The only records available for other reservists are the form P35 entries and Deductions Working Sheets.

Detailed information on taxable income payable received by, and allowable expenses due to, the reserve and auxiliary forces is contained in the Schedule E (SE) Manual at SE50110 onwards.

All employer records relating to reservists / auxiliary forces are dealt with exclusively by South Wales Office.

Please ensure that all correspondence is forwarded to the above Processing Office.

List of Reserve and Auxiliary Forces

• Royal Fleet Reserve (including officers of the retired and emergency lists of the Royal Navy and Royal Marines)
• Royal Naval Reserve (including Queen Alexandra's Royal naval Nursing Service Reserve)
• Royal Marines Reserve
• Army Reserve (including Regular Army Reserve of Officers)
• Territorial Army
• Air Force Reserve (includes Royal Air Force Reserve of Officers, Royal Air Force Volunteer Reserve including University Air Squadron members, and Class E Reserve of Airmen)
• Royal Auxiliary Air Force
• Officers, Adult Instructors and Adult Warrant Officers of the Sea Cadet Corps, Army Cadet Force, Air Training Corps or Combined Cadet Force

Class 1A contributions and Class 1 primary contributions

The legislation covering these types of National Insurance contribution is complex. Please refer to the Residence Manual and National Insurance Manual for guidance.

Class 1 secondary contributions

Where an employee is posted to work in the UK on or after 6 April 1994, by an employer who does not have a place of business in the UK, and to work for a UK employer, the UK employer is treated as the liable secondary contributor for the payment of Class 1 secondary contributions.

If the employee is posted to work in the UK but does not actually work for a UK employer then the employee will pay primary NIC only via a modified PAYE scheme