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HMRC internal manual

National Insurance Manual

Appendix 1: Draft Letter 2

Letter telling an employee of the intention to issue a notification under regulation3(2B) of the Social Security (Contributions) Regulations 2001

Dear

[A] At a recent visit to your employer [D]………………. an officer of this Department found that your earnings are paid regularly but at different intervals. The officer also found that the greater part of your earnings are paid at the longer interval but that National Insurance contributions (NICs) are being calculated using an earnings period which reflects the shorter interval.

[B] Your employer [D]…………. recently asked this Department to consider whether the earnings period applied of your earnings should be changed because the they are paid regularly but at intervals of different length and the greater part of your earnings are paid at the longer interval.

[C] You recently asked this Department to consider whether the earnings period applied to your earnings should be changed because you are paid regularly but at intervals of different length and the greater part of your earnings are paid at the longer interval.

Although NICs are being assessed in accordance with Social Security legislation, the long term effect of such a pay practice is that your earnings are subject to less NICs than would be due if all of your earnings were paid over the longer interval. Where such instances occur, this Department is able to notify an employer, under regulation 3(2B) ofthe Social Security (Contributions) Regulations 2001, that for the purposes of calculating the amount of NICs due the earnings period to be applied should be that of the longer or longest interval.

The purpose of this letter is to explain that, in order to ensure that the amount of NICs due is proportionate to the total earnings paid to you, it is our intention to issue a decision which gives your employer notice to change your earnings period to the longer interval. This means that with effect from [E] …………………, your employer will calculate NICs using a [F]…………… earnings period for you.

You will receive this decision in 30 days. In the meantime, if you think there are any reasons why your earnings period should not be changed, please let me know as soon as possible.

A similar letter has been sent to your employer.

Notes Explanation

[A] Use this paragraph if the case originated internally

[B] Use this paragraph if the employer has requested a regulation 3(2B) decision

[C] Use this paragraph if the employee has requested a regulation 3(2B) decision

[D] Insert the name of the employer

[E] Insert operative date

[F] Insert earnings period to be applied, eg monthly, quarterly