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HMRC internal manual

National Insurance Manual

HM Revenue & Customs
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NICs avoidance: treating payments as earnings: amounts chargeable to income tax

Section 74(3) of the Child Support, Pensions and Social Security Act 2000 Section 4(6) of the Social Security Contributions and Benefits Act 1992

With effect from 6 April 2000, section 4(6) of the SSCBA 1992 was amended to provide a power to make regulations to treat any amount on which an employee or director is chargeable to income tax and taxable under the provisions relating to employment, as remuneration from their employment.

The same section was amended to allow for regulations to be made to treat such amounts as paid on a particular date. That is because Class 1 NICs liability arises when a payment is made to or for the benefit of an employee/director.

Making regulations

Generally speaking, making new regulations does not require significant parliamentary time and so it is a relatively quick and easy process. Therefore, if income tax legislation is amended to charge an amount of employment income to income tax and the intention is to subject the same amount to NICs, then there is a power that can be used to make regulations for that purpose.

On some occasions, the date NICs legislation takes effect may be later than the date that the income tax legislation takes effect. For an example, see NIM52050.

Regulations treating amounts as earnings

Regulations under this power are in SS(C)R 2001. Regulation 22, and regulation 22B list payments treated as earnings under the power in section 4(6) of the SSCBA 1992.