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HMRC internal manual

Compliance Operational Guidance

From
HM Revenue & Customs
Updated
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Supporting Guidance: employer compliance: guidance by subject: commencing the compliance check: reduction of secondary contributions for certain age groups

From April 2015 age related percentage was introduced.

The rate of employer Class 1 secondary contributions will be 0% for employees over 16 and under the age of 21, up to a new earnings level, the ‘Upper Secondary Threshold’ (UST). Class 1 secondary National Insurance contributions (NICs) will continue to be payable on all earnings above the UST. The basic structure of National Insurance and how Class 1 NICs are assessed will not change. All the assessment principles will remain the same as they are now and Class 1 primary contributions will not be affected.

There will be a range of NI category letters to use when assessing secondary NICs in respect of the earnings paid to these employees.

The seven new category letters introduced to support this measure are detailed below. Three of the new letters will be removed from 6 April 2016 in line with the ending of ‘contracted-out’ status in relation to salary-related occupational pension schemes.

  • M - Not contracted-out standard rate contributions for employees under 21
  • Z - Not contracted-out deferred rate contributions for employees under 21
  • Y - Mariners not contracted-out standard rate contributions for employees under 21
  • P - Mariners not contracted-out deferred rate contributions for employees under 21
  • V - Mariners Contracted-out Salary Related contributions for employees under 21
  • I - Contracted-out Salary Related standard rate contributions for employees under 21
  • K - Contracted-out Salary Related deferred rate contributions for employees under 21

If the employer uses any of the new NI categories you must

  • check the employee’s date birth and

where the employee is over 21

  • do not disclose any date of birth or other personal details
  • advise the employer how to make any necessary open year adjustment, and
  • seek recovery for closed years, where appropriate.