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HMRC internal manual

Decisions and appeals for National Insurance Contributions and Statutory Payments

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Decision types: Elections to transfer secondary Class 1 National Insurance contributions liability to earner

Section 8(1)(ia) of the Social Security Contributions (Transfer of Functions, etc.) Act 1999; Article 7(1)(ia) of the Social Security Contributions (Transfer of Functions, etc.) (Northern Ireland) Order 1999 (SR 1999 No 671); Paragraph 3B(1)(b) of Schedule 1 to the Social Security Contributions and Benefits Act 1992; Paragraph 3B(1)(b) of Schedule 1 to the Social Security Contributions and Benefits (Northern Ireland) Act 1992

HMRC officers can decide whether to give or withdraw an approval for an election made jointly by a secondary contributor and an earner to transfer secondary National Insurance contributions (NIC) liability to the earner.

There are provisions which allow an employer to transfer secondary Class 1 NIC liability in respect of gains arising from certain securities and options (for example share options), to the primary contributor. Both the secondary contributor and the primary contributor must make a formal election which HMRC must approve before secondary NIC liability is transferred to the employee. You can find guidance about such elections in the National Insurance Manual at NIM06809.

Charities, Assets and Residence’s Employee Shares and Securities Unit (ESSU) deal with the approval and withdrawal of such elections. ESSU are responsible for issuing decisions about approval or removal of such elections. For wording of such decisions see DANSP38100.