HMRC internal manual

PAYE Manual

PAYE20090 - Employer records: set up employer record: DCNI scheme - direct collection (employee only NIC)

Commonly known as ‘PAYE Direct Payments procedures’.

A DCNI scheme type is used when direct payments of National Insurance (NI) only are to be made. Collection of the deductions is quarterly during the year. Types of individuals to which this may apply are as follows

  • Employees whose earnings come from a series of short periods of employment with different employers, for example, certain workers in docks, ports and markets
  • Employees who have no employer for PAYE purposes and cannot be dealt with under the Direct Payment (DP) arrangements
  • Certain members of the reserve and auxiliary forces who receive taxable bounties
  • Employees who normally work in more than one European Economic Area (EEA) country and who have to pay NICs in the UK on their foreign earnings under EC Regulations, but who do not have an employer in the UK
  • Pensioners whose National Insurance retirement or Widows’ pension cannot be coded-in or covered by personal allowances
  • Former DP cases where DP arrangements for tax have had to be cancelled
  • Employers who have applied to operate NICs on a modified basis under an EP Appendix 7A or EP Appendix 7B arrangement. This record is used to submit the correct figures for NICs on the NIC Settlement Return and pay any additional NICs not reported on the main employer record by 31 March following the end of the tax year (see PAYE28010 and PAYE28015 for more details)

Taxpayers within these special arrangements are sometimes known as ‘DC cases’ and any tax that is due is collected through Self-Assessment.

Note: From May 2010, EC Regulation 883/2004 introduced a change to the National Insurance Contributions responsibilities of employers based in other EC member states.

Where an employee works in the UK for an employer based in another EC member state and NI liability arises, the liability will be for both primary and secondary contributions. In such a situation the employer is responsible for setting up (or arranging for a UK agent to set up) an NI only scheme rather than a DCNI scheme to pay the NI liability to HMRC.

More information on NI can be found at PAYE75030.