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HMRC internal manual

Compliance Operational Guidance

From
HM Revenue & Customs
Updated
, see all updates

Supporting Guidance: employer compliance: guidance by subject: employer and contractor’s role: PAYE and NICs legislation

The main sections of the Regulations which require employers to

  • operate and account for PAYE tax and Class 1 National Insurance Contributions, and
  • retain records are summarised below.

The Income Tax (Pay As You Earn) Regulations 2003, (SI 2003 No. 2682)

  • Regulations 8, 21 - deduction and repayment of tax under the appropriate code.
  • Regulations 22, 23, 28, 29, 31 - calculation and making of deduction or repayment.
  • Regulations 9, 46, 47, 48, 49, 58 - employee for whom code not known.
  • Regulation 66 - deductions working sheet (DWS).
  • Regulations 68, 69 - payment of tax monthly by employer.
  • Regulations 70 - payment of tax quarterly by employer.
  • Regulation 97 - retention of employer’s records.

Social Security Contributions and Benefits Act 1992 

  • Section 3 and paragraph 2 of Schedule 1 - earnings and earnings periods.
  • Section 6 - liability to pay Class 1 NICs.
  • Sections 8 & 9 - calculation of primary and secondary Class 1 NICs.
  • Paragraph 3 of Schedule 1 - method of paying Class 1 NICs.
  • Paragraph 3B of Schedule 1 - transferring secondary NIC liability to an employee.
  • Paragraph 6 of Schedule 1 - power to combine collection of NICs with income tax.
  • Paragraph 7 & 7A of Schedule 1 - penalties in the case of returns.
  • Paragraph 7B & 7BZA of Schedule 1 - collection of NICs otherwise than through the PAYE system.

Social Security (Contributions) Regulations 2001, (SI 2001 No 1004) 

  • Regulations 2-31 - assessment of Class 1 NICs.
  • Regulation 67 and Schedule 4 - makes provision for Class 1 NICs to be paid, accounted for and recovered in a like manner as PAYE.
  • Paragraphs 6 & 7(13) of Schedule 4 - prepare and maintain a DWS.
  • Paragraph 7 of Schedule 4 - calculation of Class 1 NICs deductions.
  • Paragraph 10 of Schedule 4 - payment of NICs monthly by employer.
  • Paragraph 11 of Schedule 4 - payment of NICs quarterly by employer.
  • Paragraph 11A of Schedule 4 - payment of NICs in respect of retrospective earnings.
  • Paragraph 22 of Schedule 4 - end of year returns.
  • Regulation 26 of Schedule 4 - retention of employer’s records.

On any occasion where there is a dispute with an employer or you need to quote legislation, you should use the actual text of the Regulations.