NIC Consequences - article produced by the Construction Confederation Tax Department, available to members only.
If a worker has a birthday and becomes ‘of pensionable age’ – men 65 and women 60 – they will not need to pay Class 1 NIC and the employers contribution changes.
Things to find out first
(1) What evidence do you hold of the person’s date of birth?
(2) Is it a ‘contracted out’ employment i.e. is the person a member of your pension scheme?
Action
Before making any changes to NIC deductions, you must see:
(i) certificate of age exemption on Form CA 4140 or CF 384; OR
(ii) certificate of earners non-liability on CA 2700 or CF381; OR
(iii) employee’s birth certificate; OR
(iv) employee’s passport.
The employee can get the CA/CF forms from his tax office, by applying to:
The Inland Revenue National Insurance Contributions office
Class 1 Caseworker
Benton Park View
NEWCASTLE UPON TYNE
NE98 1ZZ.
Once you have seen the CA 4140, CF 384, CA 2700, CF 381 OR birth certificate, OR passport
· stop deducting employees NIC contribution on any normal payment of wages or salary paid at the normal pay day after the employee’s birthday – even if earned before his/her birthday. (Different rules apply if pay has been artificially held up to be paid after the employee’s birthday)
· ensure that the employers NIC rate deducted is not the contracted out rate – even if the person concerned is still part of the employer’s own pension scheme. For the avoidance of doubt – the right employers contribution is at the not contracted out rate.
Have you gone wrong?
Have you stopped employees NIC from a worker above retirement age?
You can correct the error within the tax year and repay the employee. Corrections should be shown on the deductions works sheet P11.
Over deduction for tax years before the one in which the error was discovered can only be corrected by the Inland Revenue. The employee should write to:
The Inland Revenue National Insurance Contributions Office
Refunds Group
Benton Park View
NEWCASTLE UPON TYNE
NE98. 1ZZ.