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HMRC internal manual

Compliance Operational Guidance

Supporting Guidance: employer compliance: guidance by subject: directors: NIC for company directors - how to check

NIC are normally calculated by reference to the interval at which an employee is paid. However director’s NIC is calculated on an annual earnings basis. The lower and upper earnings limits still apply.

Further information is contained at NIM12021 onwards.

It is important that the NIC calculation is checked for each director. If this process has not been carried out by RIS you should

  • determine the NIC due on the total earnings for the last closed tax year, using the limits and percentages from SEES>Info>Employer’s NIC + Tax Tables
  • pay particular attention to new directors or those who have resigned during the year where NIC is calculated on a pro-rata basis
  • compare the figures of NIC due with the NIC paid
  • record full details of the check within the papers
  • seek the employer’s explanation of any differences (ignore small discrepancies arising from the employer using the printed NIC tables to calculate the NIC).

Where an underpayment is discovered you should

  • refer the employer to booklet CA44 ‘National Insurance for Company Directors’
  • seek recovery for earlier years, where appropriate.