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HMRC internal manual

PAYE Manual

From
HM Revenue & Customs
Updated
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Employer records: set up employer record: NI scheme - national insurance only

A National Insurance (NI) scheme is used where the only liability is for primary and secondary National Insurance Contributions (NIC). The employer is responsible for setting up the NI scheme and paying the NIC to HMRC. If the employee has UK tax liability this will be paid through Self-Assessment or, if preferred, a DPGEN (tax only) scheme.

From May 2010 EC Regulation 883/2004 introduced a change to the NIC 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 or setting up (or arranging for a UK agent to set up) a NI scheme to pay the NI liability to HMRC.

UK employee posted to work abroad

When a person is posted by their UK employer to work abroad it is possible liability to primary and secondary NIC will continue. However, the person may, in certain circumstances, be considered non-resident for tax purposes.

If they do not already operate a PAYE scheme, the employer is responsible for setting up and operating a NI scheme and paying the primary and secondary NIC to HMRC.

Working in two or more EC member states

It is possible that a UK resident, who is employed by an employer in another EC member state but who carries out activity in the UK as well as that other member state, will be liable in the UK to primary Class 1 NIC. Under EC Regulations it is also possible for the employer to be liable for secondary NIC even though the employee is based in another member state.

The employer is responsible for setting up and operating a NI scheme and paying the primary and secondary NIC to HMRC.

Provision of expenses and benefits

Where the employer is also providing expenses and benefits to an employee, the employer record should be set up as a ‘P’ scheme and not ‘NI’ in anticipation of receipt of a form P11D(b) and Class 1A National Insurance charge.

Note: All ‘NI’ schemes will be in RTI from 2013-14.

More information on NI can be found at PAYE75030.