National Insurance Contributions

Before the First World War, David Lloyd George introduced, as a “temporary expedient”, the concept of National Insurance Contributions (“NICs”). NICs are now an important and permanent feature of the taxation system of the UK, being the second or third source of revenue for the State.

NIC costs are a significant element of the overall payroll costs of all employers and also require a significant compliance effort.

Until recently, under the au#£$@*!es of the Contributions Agency, collection of NICs was, less rigorously enforced than perhaps it might have been. However, Collection is now in the hands of the Inland Revenue, and the regular PAYE audit will also examine the employer’s NICs compliance and procedures.

Complex rules have been introduced over the last few years, designed to prevent avoidance through the use of “artificial remuneration” schemes, such as the payment of employees in gold bullion, platinum sponge, antique carpets, etc. and to bring in to charge “normal” benefits such as company cars, school fees, etc. As a result employers may find that an inadvertent oversight results in liability to penalties and interest.

Furthermore, NIC legislation is now overlaid by a body of EU regulations, which introduce more complexity of which few employers can be expected to be adequately aware. Cross-border employments are becoming increasingly more common and require careful consideration of the relevant regulations.

Creaseys taxation department is accustomed to helping employers with NIC compliance and enquiries, and is well equipped to deal with all issues arising.

For further information please contact Elizabeth Robertson or Tony Harvey.


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