When and how an employee operates PAYE on their employment income

Information about direct collection and direct payment schemes, used to collect tax or National Insurance contributions (NICs), or both.

Class 1 National Insurance contributions can sometimes be payable where there is either no:

  • PAYE Income Tax liability
  • secondary (employer’s share) National Insurance liablity

Types of schemes

Scheme type Circumstances
Direct Collection (employee only NICs) Set up by an employee where direct payment of primary Class 1 National Insurance only is due
Direct Collection (Income Tax only) Set up by an employee where deduction of Income Tax only is due
Direct Payment (Income Tax and NICs) Set up by an employee where direct payment of primary National Insurance only and PAYE Income Tax is due

How to register

You should register by phone or post

Contact HM Revenue and Customs - they’ll arrange for someone to call you back to help you register.

What to report

When sending a Full Payment Summary (FPS) where earnings are subject to NICs only, you must:

  • report the ‘Gross earnings for NICs in this period’ and all appropriate NICs data
  • enter zeros in the ‘Taxable pay’ and associated tax fields
  • enter code NT in the ‘Tax code’ field on the FPS as this is a mandatory field

If you realise that you have made a mistake and you have included details in the taxable pay and tax fields you should correct the error by entering zeros in the taxable pay and associated tax fields on your next FPS.

Help and advice

Contact the Employer helpline or Customer Operations Employer Office

Published 22 September 2014