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HMRC internal manual

National Insurance Manual

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HM Revenue & Customs
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Class 1A National Insurance contributions: Calculating Class 1A NICs: Amounts made good by the employee: Making good payments reduce earnings chargeable to income tax: Effect on Class 1A NICs liability

NIM15201 explains what is meant by making good.

Making good payment made on or before date Class 1A NICs were dueIf

  • a making good payment reduces the amount of general earnings chargeable to income tax (see NIM15205), and
  • the payment is made no later than the date Class 1A NICs must be paid to HMRC, i.e. 19th July or 22nd July for those employers who pay using an approved electronic method,Class 1A NICs are due on the same amount of earnings chargeable to income tax.

Making good payment made after Class 1A NICs were dueIf

  • a making good payment reduces the amount of general earnings chargeable to income tax (see NIM15205), and
  • the payment is made after the date Class 1A NICs must be paid to HMRC, i.e. 19th July or 22nd July for those employers who pay using an approved electronic method,Class 1A NICs are due on the amount of earnings chargeable to income tax without deducting the amount made good, section 10(1)(a) SSCBA 1992 refers. That is because at that time that Class 1A NICs were due to be paid, the amount of general earnings chargeable to income tax was not reduced by a making good payment, section 10(1)(a) SSCBA 1992 refers.

‘Chargeable’ does not have the same meaning as ‘charged’ or ‘payable’. Although, the chargeable general earnings may be reduced to a lower amount or nil by a making good payment after the date that the Class 1A NICs were due, Class 1A NICs are due on the general earnings chargeable to income tax based on the facts that existed on the due date of payment.

For guidance on the NICs treatment of loan accounts, see NIM12016 and NIM16675.

Disputed liabilityIf an employer disputes NICs liability and will not accept that Class 1A NICs are due on the cash equivalent of the benefit calculated using the facts available on the due date of payment, issue a decision under section 8 of the Social Security Contributions (Transfer of Functions, etc.) Act 1999.

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