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HMRC internal manual

National Insurance Manual

NICs avoidance: employment income provided through third parties: prevention of NICs on same amounts twice

Paragraph 2A of Part 10 of Schedule 3 to the Social Security (Contributions) Regulations 2001

This legislation provides that payments which represent, arise, or derive from amounts which have already been treated as earnings under regulation 22B of the SS(C)R 2001, are disregarded when calculating an employed earner’s earnings for Class 1 NICs purposes.

Paragraph 2A is partly intended to ensure that amounts treated as earnings under regulation 22B are not subsequently liable to NICs again. It does not give credit for NICs paid against those that are due.

Paragraph 2A performs a similar function to section 554Z13 of ITEPA 2003. But it is not intended to be a direct NICs equivalent.

Section 554Z13 of ITEPA 2003 prevents a further amount of employment income being chargeable to income tax after Part 7A income has arisen. This only applies if certain conditions are met, see EIM45870. But section 554Z13 does not apply for NICs purposes.

For guidance about when Class 1 NICs liability may arise on an amount which counts as employment income under Part 7A of ITEPA 2003, see NIM52150.