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HMRC internal manual

National Insurance Manual

Class 1A National Insurance contributions: Liability for Class 1A NICs: Effect of the Income Tax (Earnings and Pensions) Act 2003

Section 722 and paragraphs 169, 174, 175 and 176 of Schedule 6 of The Income Tax (Earnings and Pensions) Act 2003

NIM00005 explains the effect of The Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003) on NICs legislation.

ITEPA 2003 replaced the words ‘emoluments’ with ‘general earnings’ and replaced the phrase ‘chargeable to income tax under Schedule E’ with the phrase ‘chargeable to income tax on general earnings’ in sections 10, 10ZA and 10ZB of SSCBA 1992.

The SS(C)R 2001 were amended by the Social Security (Contributions, Categorisation of Earners and Intermediaries) (Amendment) Regulations 2004 (SI 2004 No 770) (SS(CCEI)(A)R 2004) with effect from 6 April 2004 to reflect the changes brought about by ITEPA. The changes ranged from simple substitutions of ICTA references for equivalent ITEPA references, to more complex re-drafting of entire regulations to reflect the modern language of ITEPA. As an example, regulation 40 of the SSCR 2001, which provides for Class 1A NICs not to be payable

  • in prescribed circumstances,
  • by prescribed persons, or
  • in respect of prescribed persons, or
  • on certain general earnings (ITEPA terminology)was amended by SS(CCEI)(A)R 2004 to reflect the new terminology and references to specific sections within ITEPA.

NIM guidance which includes references to the Employment Income Manual and ITEPA 2003, includes Schedule E and ICTA 1988 cross-references so that staff can deal with pre 2003/2004 cases.