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HMRC internal manual

Compliance Operational Guidance

Alternative rights of recovery (PAYE directions): primary class 1 NICs: Directions Team processes: initial review – calculating primary class 1 NICs and interest

When calculating the primary Class 1 NICs to be included in a decision you must

  • make provision for any amount already paid or deemed to have been paid
  • identify the relevant NI Category, as this determines the rate at which primary Class 1 is deducted. The NIRS2 record may show the category letter.  

SEES Calculation

Use SEES calculation to calculate the primary Class 1 NI liability as this provides the options to include the

  • relevant NI category letter
  • annual or pro-rata earnings period
  • year (enter ’2017’ for tax year 2017-2018, and so on).


You should make the relevant entries on the C500 for NICs in the columns provided (see COG931480).


Under Paragraph 17A Schedule 4 of the Social Security (Contributions) Regulations 2001 interest is payable by the employee on primary Class 1 NICs that the employer has wilfully failed to deduct.

Interest is charged from the statutory due date which, for decision cases, is 19 April following the year in which the under-deduction occurred.

SEES can be used to calculate interest.

Explanatory Note

When notifying employees of PAYE tax under-deducted, you must also include any under-deducted and unpaid primary Class 1 NICs and interest due in respect of Class 1 NIC in the explanatory note (COG931920 refers).