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HMRC internal manual

Employment Status Manual

Basic principles: how to work out the deemed payment: step six

Paragraph 7 Schedule 12 Finance Act 2000/Section 54(1) ITEPA 2003

Regulation 7(1) SI 2000 No.727

Where the intermediary has already paid any secondary Class 1 and/or Class 1A NICs for that year in respect of the worker’s earnings or benefits in kind, then a deduction is given for the amount in question at Step Six. However, this deduction can only be made where the NICs have been paid. So, if the Class 1 and/or Class 1A NICs are due but have not been paid, then no deduction can be made.

Relief for the amount of secondary Class 1 NICs on the deemed payment is given at Step Eight. See ESM8220.