United Kingdom
6 January 2012 - HMRC publishes FAQs on National Insurance contributions on disguised remuneration
HMRC has published Frequently Asked Questions on the operation of National Insurance Contributions (NICs) on earnings which are taxable under the 'disguised remuneration' rules.
The disguised remuneration rules came into full effect for income tax purposes on 6 April 2011, but the NIC rules only came into effect on 6 December 2011. Any 'relevant step' for disguised remuneration purposes taken before 6 December 2011 will not therefore give rise to an NIC liability. However, HMRC states "It must not be forgotten that normal NIC liability rules must still be considered in respect of these payments."
The FAQs cover matters such as the measurement and timing of disguised remuneration earnings for NIC purposes. One particular point that is highlighted is that if a relevant step is not the payment of a sum of money, PAYE is not applied to employment income to which the remittance basis applies, but NIC should nevertheless be applied to such income, as there is no remittance basis for NIC purposes.
Please contact Karl Vernum for further information, or for assistance on any NIC icsues.