The Social Security (Contributions) Regulations 2001

A payment of, or a contribution towards, travel expenses which the holder of an office or employment is obliged to incur and pay as the holder of that office or employment but this paragraph is subject to paragraph 1A.

For the purposes of this paragraph—

• (za) “ordinary commuting” means travel between—

• (i) the employee’s home and a permanent workplace; or

• (ii) a place that is not a workplace and a permanent workplace;

• (zb) “private travel” means travel between—

• (i) the employee’s home and a place that is not a workplace; or

• (ii) two places neither of which is a workplace;

• (a) “travel expenses” means amounts necessarily expended on travelling in the performance of the duties of the office or employment or other expenses of travelling which are attributable to the necessary attendance at any place of the holder of the office or employment in the performance of the duties of the office or employment and are not expenses of—

• (i) ordinary commuting;

• (ii) travel between any two places that is for practical purposes substantially ordinary commuting;

• (iii) travel between any two places that is for practical purposes substantially private travel; or

• (iv) private travel.

• (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (c) expenses of travel by the holder of an office or employment between two places at which he performs the duties of different offices or employments under or with companies in the same group are treated as necessarily expended in the performance of the duties which he is to perform at his destination; and

• (d) for purpose of sub-paragraph (c) companies are to be taken to be members of the same group if and only if—

• (i) one is a 51 per cent subsidiary of the other; or

• (ii) both are 51 per cent subsidiaries of a third company

within the meaning of section 838(1)(a) of the Taxes Act (subsidiaries).

Travel and foreign travel expenses of overseas employees

4

A payment of, or a contribution towards, the expenses of the earner’s employment to the extent that those expenses—

• (a) are deductible for income tax purposes in accordance with section 341 of ITEPA 2003 (travel at start or finish of overseas employment); or

• (b) would be so deductible if—

• (i) Conditions B and C were omitted from that section; and

• (ii) the earnings of the employment were subject to income tax as employment income under that Act.

This paragraph is subject to paragraph 1A.

Travel expenses of employees not domiciled in the United Kingdom

5

So much of an employed earner’s earnings as equals the aggregate amount of the deductions—

• (a) permitted for income tax purposes under sections 373 and 374 of ITEPA 2003 (travel costs and expenses of a non-resident or qualifying new resident employee or the employee’s spouse, civil partner or child where duties are performed in the United Kingdom ); or

• (b) which would be so permitted if the earnings of the employment were subject to tax as employment income under ITEPA 2003.

This paragraph is subject to paragraph 1A.

Travelling expenses of workers on offshore gas and oil rigs

6

A payment of, or a contribution towards, expenses where that payment or contribution is disregarded for the purposes of calculating the emoluments general earnings under section 305 of ITEPA 2003 (offshore oil and gas workers: mainland transfers).

Incidental expenses in connection with cars provided for private use

7

• (1) A payment—

• (a) by way of the discharge of any liability which by virtue of section 239(1) of ITEPA 2003 (payments and benefits connected with taxable cars and vans and exempt heavy goods vehicles); or

• (b) of expenses, which by virtue of section 239(2) of that Act;

is not treated as general earnings of the employment chargeable to income tax....

• (2) Sub-paragraph (1) does not apply so far as the payment is made pursuant to optional remuneration arrangements.

Car parking facilities

8

A payment of, or a contribution towards, the provision of car parking facilities at or near the earner’s place of employment which, by virtue of section 237 of ITEPA 2003, is not regarded as general earnings of the earner’s employment.

Specific and distinct payments of, or towards, expenses actually incurred

9

• (1) For the avoidance of doubt, there shall be disregarded any specific and distinct payment of, or contribution towards, expenses which an employed earner actually incurs in carrying out his employment.

This is subject to the following qualifications.

• (2) Sub-paragraph (1) does not authorise the disregard of any amount by way of relevant motoring expenditure, within the meaning of paragraph (3) of regulation 22A—

• (a) in excess of that permitted by the formula in paragraph (4) of that regulation; or

• (b) so far as it is paid pursuant to optional remuneration arrangements.

• (3) Sub-paragraph (1) does not authorise the disregard of any amount which—

• (a) falls within paragraphs (12) or (13) of regulation 22; or

• (b) is paid to an employed earner in respect of anticipated expenses that have yet to be incurred (whether or not such expenses are actually incurred after the payment is made).

Council tax on accommodation provided for employee’s use

10

A payment of, or a contribution towards meeting a person’s liability for council tax or water or sewerage charges in respect of accommodation occupied by him and provided for him by reason of his employment if by virtue of sections 99 or 100 of ITEPA 2003 (accommodation provided for performance of duties or as a result of a security threat), he is not liable to income tax ... in respect of the provision of that accommodation.

Rates on accommodation provided for employee’s use

11

A payment of, or a contribution towards meeting, a person’s liability for rates or water or sewerage charges in respect of accommodation occupied by him and provided for him by reason of his employment if by virtue of sections 99 or 100 of ITEPA 2003 (accommodation provided for performance of duties or as a result of a security threat), he is not liable to income tax... in respect of the provision of that accommodation.

Foreign service allowance

12

A payment by way of an allowance which is not regarded as income for any income tax purpose by virtue of section 299 of ITEPA 2003 (Crown employees' foreign service allowance).

Commonwealth War Graves Commission and British Council: extra cost of living allowance

13

A payment by way of an allowance to a person in the service of the Commonwealth War Graves Commission or the British Council paid with a view to compensating him for the extra cost of living outside the United Kingdom in order to perform the duties of his employment.

Overseas medical treatment

14

A payment of, or a contribution towards, expenses incurred in—

• (a) providing an employee with medical treatment outside the United Kingdom (including providing for him to be an in-patient) in a case where the need for the treatment arises while the employee is outside the United Kingdom for the purposes of performing the duties of his employment; or

• (b) providing insurance for the employee against the cost of such treatment in a case falling within sub-paragraph (a).

PART IX — Incentives by way of securities.

Certain payments by way of shares, interests in shares and gains arising from them disregarded

1

• (1) Payments by way of securities, restricted securities and restricted interests in securities, and gains arising from them, are disregarded in the calculation of an employed earner’s earnings to the extent mentioned in this Part.

• (2) For the purposes of paragraphs 13, 15 and 16—

• (a) “body corporate” includes—

• (i) a body corporate constituted under the law of a country or territory outside the United Kingdom, and

• (ii) an unincorporated association wherever constituted;

• (b) “total discount” means the difference between the total value of the exercise price of the shares that are subject to the right in question and the total market value of that right;

• (c) “total market value” means the price which the shares that are subject to the right in question might reasonably be able to fetch in the open market; and

• (d) the total market value of the subsequent right is similar to the total market value of the first right if it is not substantially greater than the first right.

Shares in secondary contributor or associated body

2

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Rights to acquire shares

3

A payment by way of a right to acquire securities.

Enterprise management incentives

4

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Priority share allocations

5

A payment by way of an allocation of shares in priority to members of the public in respect of which no liability to income tax arises by virtue of section 542 of ITEPA 2003.

Partnership share agreements

6

A payment that is deducted from the earnings of the employment under a partnership share agreement.

Shares under employee share ownership plan

7

A payment by way of an award of shares under a share incentive plan within the meaning of Schedule 2 to ITEPA 2003.

Shares under approved profit sharing schemes

8

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Conditional interest in shares

9

• (1) A payment by way of the acquisition of restricted securities, or a restricted interest in securities, where those securities are, or that interest is, employment-related, if no charge to income tax arises under section 425 of ITEPA 2003 other than by virtue of subsection (2) of that section.

• This is subject to the following qualification.

• (2) This paragraph does not apply if an election has been made as mentioned in subsection (3) of section 425 of ITEPA 2003.

• (3) References in this paragraph to section 425 of ITEPA 2003 are to that section as substituted by paragraph 3(1) of Schedule 22 to the Finance Act 2003.

Conditional interest in shares: gains from exercise etc. of share options

10

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Convertible shares

11

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Convertible shares: gains from the exercise etc. of share options

12

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Share option gains by directors and employees

13

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Shares acquired under options granted before 9th April 1998

14

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Assignment or release of option

15

A payment made by the Ministry of Defence to a person under the War Widows Recognition Payment Scheme.

Exercise, assignment or release of options acquired before 6th April 1999

16

A payment to which no liability to income tax arises by virtue of any of the following provisions of ITEPA 2003—

• (a) section 292 (accommodation expenses of MPs);

• (b) section 293 (overnight expenses of other elected representatives);

• (c) section 293A (UK travel and subsistence expenses of MPs);

• (ca) section 293B (UK travel expenses of other elected representatives);

• (d) section 294 (European travel expenses of MPs and other representatives).

PART X — MISCELLANEOUS AND SUPPLEMENTAL

Other miscellaneous payments to be disregarded

1

• (1) The payments listed in this Part are disregarded in the calculation of earnings.

• (2) Paragraph 4 contains additional rules about the way in which the components of a payment by way of expenses incidental to a qualifying absence from home are to be treated for the purpose of earnings-related contributions if the permitted maximum is exceeded.

Payments on account of sums already included in the computation of earnings

2

A payment on account of a person’s earnings in respect of his employment as an employed earner which comprises, or represents and does not exceed sums which have previously been included in his earnings for the purpose of his assessment of earnings-related contributions.

Payments discharging liability for secondary Class 1 contributions following election under paragraph 3B of Schedule 1 to the Contributions and Benefits Act

3

A payment by way of the discharge of any liability for secondary Class 1 contributions which has been transferred from the secondary contributor to the employed earner by election made jointly by them for the purposes of paragraph 3B(1) of Schedule 1 to the Contributions and Benefits Act (elections about contribution liability in respect of relevant employment income) .

Payments by way of incidental expenses

4

• (1) A payment by way of incidental overnight expenses, in whatever form, which by virtue of section 240 of ITEPA 2003 are not general earnings liable to income tax under that Act.

• (2) If a payment is made by way of incidental overnight expenses in connection with a qualifying period, but the amount of that payment (calculated in accordance with section 241 of ITEPA 2003) exceeds the permitted amount, sub-paragraphs (3) to (6) apply.

• (3) So much of the payment as is made by way of cash shall be included in the calculation of earnings.

• (4) The amount of cash for which a cash voucher can be exchanged shall be included in the calculation of earnings.

• (5) The cost of provision of any non-cash voucher shall be included in the calculation of earnings and anything for which the voucher can be exchanged shall be disregarded in that calculation.

• (6) Any payment by way of a benefit in kind shall be disregarded in the calculation of earnings.

• (7) In this paragraph—

• “the cost of provision” in relation to a non-cash voucher is the cost incurred by the person at whose expense the voucher is provided;

• “the permitted amount” has the meaning given in section 241(3) of ITEPA 2003; and

• “qualifying period” has the meaning given in section 240(1)(b) and (4) of ITEPA 2003.

Gratuities and offerings

5

• (1) A payment of, or in respect of, a gratuity or offering which—

• (a) satisfies the condition in either sub-paragraph (2) or (3); and

• (b) is not within sub-paragraph (4) or (5).

• (2) The condition in this sub-paragraph is that the payment—

• (a) is not made, directly or indirectly, by the secondary contributor; and

• (b) does not comprise or represent sums previously paid to the secondary contributor.

• (3) The condition in this sub-paragraph is that the secondary contributor does not allocate the payment, directly or indirectly, to the earner.

• (4) A payment made to the earner by a person who is connected with the secondary contributor is within this sub-paragraph unless—

• (a) it is—

• (i) made in recognition for personal services rendered to the connected person by the earner or by another earner employed by the same secondary contributor; and

• (ii) similar in amount to that which might reasonably be expected to be paid by a person who is not so connected; or

• (b) the person making the payment does so in his capacity as a tronc-master.

• (5) A payment made to the earner is within this sub-paragraph if it is made by a trustee holding property for any persons who include, or any class of persons which includes, the earner.

• In this sub-paragraph “trustee” does not include a tronc-master.

• (6) A person is connected with the secondary contributor for the purposes of this paragraph if his relationship with the secondary contributor, or where the employer and secondary contributor are different, with either of them, is as described in subsection (2), (3), (4), (5), (6) or (7) of section 839 of the Taxes Act (connected persons).

Redundancy payments

6

For the avoidance of doubt, in calculating the earnings paid to or for the benefit of an earner in respect of an employed earner’s employment, any payment by way of a redundancy payment shall be disregarded.

Sickness payments attributable to contributions made by employed earner

7

If the funds for making a sickness payment under arrangements of the kind mentioned in section 4(1)(b) of the Contributions and Benefits Act are attributable in part to contributions to those funds made by the employed earner, for the purposes of section 4(1) of that Act the part of that payment which is attributable to those contributions shall be disregarded.

Expenses and other payments not charged to income tax under miscellaneous exemptions

8

A payment which is not charged to tax under any of the following provisions of ITEPA 2003—

• (a) section 245 (travelling and subsistence during public transport strikes);

• (b) section 246 (transport between work and home for disabled employees: general);

• (c) section 248 (transport home: late night working and failure of car-sharing arrangements);

• (d) section 290A (accommodation outgoings of ministers of religion);

• (e) section 290B (allowances paid to ministers of religion in respect of accommodation outgoings);

• (f) section 321 (suggestion awards).

VAT on the supply of goods and services by employed earner

9

If—

• (a) goods or services are supplied by an earner in employed earner’s employment;

• (b) earnings paid to or for the benefit of the earner in respect of that employment include the remuneration for the supply of those goods or services; and

• (c) value added tax is chargeable on that supply;

an amount equal to the value added tax chargeable on that supply shall be excluded from the calculation of those earnings.

Employee’s indemnity insurance

10

A payment which by virtue of section 346 of ITEPA 2003 (deduction for employee liabilities) is deductible from the general earnings of the employment chargeable to tax under that Act.

This paragraph is subject to paragraph 1A of Part 8 of this Schedule.

Fees and subscriptions to professional bodies, learned societies etc

11

A payment of, or a contribution towards any fee, contribution or annual subscription which, under section 201(1) of the Taxes Act (fees and subscriptions to professional bodies, learned societies etc) is deductible from the emoluments of any office or employment. This paragraph is subject to paragraph 1A of Part 8 of this Schedule.

Holiday pay

12

A payment in respect of a period of holiday entitlement where—

• (a) the sum paid is derived directly or indirectly from a fund—

• (i) to which more than one secondary contributor contributes, and

• (ii) the management and control of which are not vested in those secondary contributors; or

• (b) the person making the payment is entitled to be reimbursed from such a fund.

Payments to ministers of religion

13

A payment of a fee in respect of employment as a minister of religion which does not form part of the stipend or salary paid in respect of that employment.

Payments in lieu of coal

14

• (1) A payment in lieu of the provision of coal or smokeless fuel, if the employee is—

• (a) a colliery worker;

• (b) a former colliery worker;

and the condition in sub-paragraph (2) is met.

• (2) The condition is that the amount of coal or fuel in respect of which the payment is made does not substantially exceed the amount reasonably required for personal use.

• (3) That condition is assumed to be met unless the contrary is shown.

• (4) In this paragraph, “colliery worker” means a coal miner or any other person employed at or about a colliery otherwise than in clerical, administrative or technical work; and “former colliery worker” shall be construed accordingly.

• (5) This paragraph does not apply to Northern Ireland.

SCHEDULE 4 — Provisions derived from the Income Tax Acts and the Income Tax (Pay As You Earn) Regulations 2003

PART I — GENERAL

Interpretation

1

• (1) In this Schedule the “PAYE Regulations” means the Income Tax (Pay As You Earn) Regulations 2003.

• (2) In this Schedule, except where the context otherwise requires—

“aggregated” means aggregated and treated as a single payment under paragraph 1(1) of Schedule 1 to the Act;

“allowable pension contributions” means any sum paid by an employee by way of contribution towards a pension fund or scheme which is withheld from the payment of PAYE income and for which a deduction must be allowed from employment income under section 592(7) or 594(1) of the Taxes Act (exempt approved schemes and exempt statutory schemes);

“closed tax year” means any year preceding the current year and cognate expressions shall be construed accordingly;

“Compensation of Employers Regulations” means the Statutory Maternity Pay (Compensation of Employers) and Miscellaneous Amendments Regulations 1994 ...

“deductions working sheet” means any form of record on or in which are to be kept the matters required by this Schedule in connection with an employee’s general earnings and earnings-related contributions ... ...

“earnings-related contributions” means contributions payable under the Act by or in respect of an employed earner in respect of employed earner’s employment;

“employed earner” and “employed earner’s employment” have the same meaning as in the Act;

“employee” means any person in receipt of ... earnings;

“employer” means the secondary contributor determined—

• (a) by section 7 of the Act;

• (b) under regulation 5 of, and Schedule 3 to, the Social Security (Categorisation of Earners) Regulations 1978; or

• (c) under regulation 122;

...

...

“Inland Revenue” means any officer of the Board of Inland Revenue;

“mariner” has the same meaning as in regulation 115;

“non-Real Time Information employer” means an employer other than one within sub-paragraph (4);

“Real Time Information employer” has the meaning given in sub-paragraph (4);

...

“tax month” means the period beginning on the 6th day of any calendar month and ending on the 5th day of the following calendar month;

“tax period” means a tax quarter where paragraph 11 has effect, but otherwise means a tax month;

“tax quarter” means the period beginning on 6th April and ending on 5th July, or beginning on 6th July and ending on 5th October, or beginning on 6th October and ending on 5th January, or beginning on 6th January and ending on 5th April;

“voyage period” has the same meaning as in regulation 115;

“year” means tax year;

and other expressions have the same meaning as in the Income Tax Acts.

• (3) For the purposes of paragraphs 7(13), 9, 10, 11 and 22, “primary Class 1 contributions” and “earnings-related contributions” shall, unless the context otherwise requires, include any amount paid on account of earnings-related contributions in accordance with the provisions of regulation 8(6).

• (4) The following are Real Time Information employers for the purposes of this Schedule—

• (a) an employer who has entered into an agreement with HMRC to comply with the provisions of this Schedule which are expressed as relating to Real Time Information employers;

• (b) an employer within sub-paragraph (5);

• (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ; and

• (d) on and after 6th October 2013, all employers.

• (5) An employer is within this paragraph if the employer has been given a general or specific direction by the Commissioners for Her Majesty's Revenue and Customs before 6th October 2013 to deliver to HMRC returns under paragraph 21A of this Schedule (real time returns of information about payments of ... earnings).

Multiple employers

2

• (1) If—

• (a) an employer has made an election under regulation 98 of the PAYE Regulations to be treated as a different employer in respect of each group of employees specified in the election, and

• (b) no improper purpose notice has been given, or if one has been given it has been withdrawn,

he shall be treated as having made an identical election for the purposes of this Schedule.

• (2) In this paragraph an “improper purpose notice” is a notice issued to the employer stating that it appears to the Inland Revenue that the election is made wholly or mainly for an improper purpose within the meaning of regulation 99(2) of the PAYE Regulations.

Intermediate employers

3

• (1) Where an employee works for a person who is not his immediate employer, that person shall be treated as the employer for the purpose of this Schedule, and the immediate employer shall furnish the principal employer with such particulars of the employee’s ... earnings as may be necessary to enable the principal employer to comply with the provisions of this Schedule.

• (2) In this paragraph—

• “the principal employer” means the person specified as the relevant person in the direction referred to in sub-paragraph (4), and

• “the immediate employer” means the person specified as the contractor in that direction.

• (3) If the employee’s ... earnings are actually paid to him by the immediate employer—

• (a) the immediate employer shall be notified by the principal employer of the amount of earnings-related contributions which may be deducted when those earnings are paid to the employee, and may deduct the amount so notified to him accordingly; and

• (b) the principal employer may make a corresponding deduction on making to the immediate employer the payment out of which those earnings will be paid.

• (4) This paragraph only applies if a direction has been given by the Board under section 691 of ITEPA 2003 (PAYE: mobile UK workforce).

• (5) Where an employee is paid a sickness payment which by virtue of regulation 23 is not made through the secondary contributor in relation to the employment—

• (a) the person making that payment shall furnish the secondary contributor with such particulars of that payment as may be necessary to enable the secondary contributor to comply with this Schedule; and

• (b) for the purposes only of this Schedule the secondary contributor shall be deemed to have made the sickness payment.

Employer’s earnings-related contributions

4

If, under this Schedule, a person pays any earnings-related contributions which, under section 6(4) of the Act , another person is liable to pay, his payment of those contributions shall be made as agent for that other person.

Inspectors and Collectors

5

Any legal proceedings or administrative act authorised by or done for the purposes of this Schedule and begun by one Inland Revenue officer may be continued by another officer, and any officer may act for any division or other area.

PART II — DEDUCTION OF EARNINGS-RELATED CONTRIBUTIONS

Deduction of earnings-related contributions

6

• (1) Every employer, on making during any year to any employee any payment of ... earnings in respect of which earnings-related contributions are payable, or are treated as payable...—

• (a) shall, if he has not already done so, prepare ... a deductions working sheet for that employee, and

• (b) may deduct earnings-related contributions in accordance with this Schedule.

• (1A) Where a liability to pay retrospective contributions has arisen in respect of an employee, an employer shall amend the relevant deductions working sheet or where necessary prepare one in respect of that employee.

• (2) Subject to sub-paragraph (3), an employer shall not be entitled to recover any earnings-related contributions paid or to be paid by him on behalf of any employee otherwise than by deduction in accordance with this Schedule.

• (3) Sub-paragraph (2) does not apply to secondary Class 1 contributions in respect of which an election has been made jointly by the secondary contributor and the employed earner for the purposes of paragraph 3B(1) of Schedule 1 to the Act (election in respect of transfer of secondary contribution liability on relevant employment income) if the election provides for the collection of the amount in respect of which liability is transferred.

Calculation of deduction

7

• (1) Subject to sub-paragraph (2), on making any payment of ... earnings to the employee, the employer may deduct from those ... earnings the amount of the earnings-related contributions based on those ... earnings ... which the employee is liable to pay under section 6(4) of the Act (the “section 6(4)(a) amount”).

• (1A) On making any chain payment the deemed employer may deduct the amount of earnings related contributions calculated by reference to the deemed direct earnings which the deemed employer is liable to pay.

• (1B) In sub-paragraph (1A) “chain payment”, “deemed direct earnings” and “deemed employer” have the meanings given in regulations 14(2)(a), 14(3) and 20(5) respectively of the Social Security Contributions (Intermediaries) Regulations 2000.

• (2) Where two or more payments of ... earnings fall to be aggregated, the employer may deduct the amount of the earnings-related contributions based on those ... earnings, which are payable by the employee, either wholly from one such payment or partly from one and partly from the other or any one or more of the others.

• (3) If the employer–

• (a) on making any payment of ... earnings to an employee does not deduct from those ... earnings the full section 6(4)(a) amount, or

• (b) is treated as making a payment of ... earnings by paragraph 4A,

he may recover, in a case falling within paragraph (a) the amount not so deducted or, in a case falling within paragraph (b) the section 6(4)(a) amount, by deduction from any subsequent payment of ... earnings made by the employer to that employee during the same year and, where the case falls within paragraph (b) or sub-paragraph 4(a) or (f), during the following year.

• This sub-paragraph is subject to sub-paragraphs (4) and (5).

• (3A) Where an amount has been treated as retrospective earnings paid to or for the benefit of an employee, the employer may deduct the retrospective contributions based on those earnings from any payment of ... earnings made by him to that employee—

• (a) after the relevant retrospective contributions regulations come into force, and

• (b) during the same and the following year.

This sub-paragraph is subject to sub-paragraph (5).

• (4) Sub-paragraph (3) applies only where—

• (a) the under-deduction occurred by reason of an error made by the employer in good faith;

• (b) the ... earnings in respect of which the under-deduction occurred are treated as earnings by virtue of regulations made under section 112 of the Act (certain sums to be earnings);

• (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (d) the ... earnings in respect of which the under-deduction occurred are, by virtue of regulation 23, not paid through the secondary contributor in relation to the employment; ...

• (e) the employer is treated as making a payment of ... earnings by paragraph 4A; or

• (f) the payment in question is made to a person whose place of employment is outside the United Kingdom and on whose ... earnings Class 1 contributions are, but income tax is not, payable.

• (5) For the purposes of sub-paragraphs (3), (3A), (4), (8) and (11)—

• (a) the amount which by virtue of those sub-paragraphs may be deducted from any payment, or from any payments which fall to be aggregated, shall be an amount in addition to, but not in excess of, the amount deductible from those payments under the other provisions of this Schedule; and

• (b) for the purposes of Part III of this Schedule an additional amount which may be deducted by virtue of those sub-paragraphs in a case falling within paragraph (a) of any of those sub-paragraphs except sub-paragraph (3A) shall be treated as an amount deductible under this Schedule only in so far as the amount of the corresponding under-deduction has not been so treated.

This is subject to the following qualification.

• (5A) Where a payment—

• (a) falls within sub-paragraph (4)(e) or (f),

• (b) comprises a beneficial interest in securities, or

• (c) is treated as earnings within the meaning of Part 7 of the Income Tax (Earnings and Pensions) Act 2003,

sub-paragraph (5B) applies.

• (5B) If this sub-paragraph applies—

• (a) sub-paragraph (5)(a) shall have effect as if “, but not in excess of,” were omitted; and

• (b) sub-paragraph (8) shall have effect as if at the end there were added “or the following year”

• (6) Sub-paragraph (8) applies where an employer makes a payment consisting either soley of non-monetary earnings, or a combination of monetary and non-monetary earnings, to—

• (a) an employee;

• (b) an ex-employee,

and at the time of the payment of those earnings there are no, or insufficient, monetary earnings from which the employer could deduct the section 6(4)(a) amount.

• (7) In sub-paragraph (6)(b) “ex-employee” means a person who—

• (a) ceases to be employed by the employer in a particular year (“the cessation year”); and

• (b) receives such earnings from the employer after the cessation of employment but in the cessation year.

• (8) Where, in the circumstances specified in sub-paragraph (6), the employer–

• (a) does not deduct from the earnings referred to in that sub-paragraph the full section 6(4)(a) amount, or

• (b) is treated as making a payment of ... earnings by paragraph 4A,

he may recover, in a case falling within paragraph (a) the amount not so deducted or, in a case falling within paragraph (b) the section 6(4)(a) amount, by deduction from any subsequent payment of monetary earnings to that employee, or ex-employee (as the case may be) during the same year.

• This sub-paragraph is subject to sub-paragraph (5).

• (9) Sub-paragraph (11) applies if—

• (a) a person (“the ex-employee”) ceases in a particular tax year (“the cessation year”) to be employed by a particular employer (“the employer”); and

• (b) the ex-employee receives from the employer in the cessation year, after the cessation of employment, earnings in the form of—

• (i) a beneficial interest in securities,

• (ii) a conditional interest in securities or a beneficial interest in convertible securities treated as earnings under regulation 22(5), (6) or (7),

• (iii) any gain on which the ex-employee is chargeable to tax by virtue of section 4(4)(a) of the Act; and

• (c) at the time of the payment of those earnings there are no monetary earnings, or insufficient monetary earnings, from which the employer could deduct the section 6(4)(a) amount.

• (10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• ...

• (11) Where, in the circumstances specified in sub-paragraph (9), the employer has not deducted, from the earnings referred to in sub-paragraph (9)(b), the full amount of earnings-related contributions which by virtue of this Schedule he is entitled to deduct, he may, without prejudice to sub-paragraph (8) but subject to sub-paragraph (12)(b), recover the amount so under-deducted by deduction from the proceeds of sale of some, or all, of—

• (a) the securities referred to in of sub-paragraph 9(b)(i) and (ii); or

• (b) the securities which form the subject matter of the option referred to in sub-paragraph (9)(b)(iii).

• (12) For the purposes of sub-paragraph (11)—

• (a) the whole of the amount under-deducted may be recovered from the proceeds of sale of some, or all, of the securities referred to in that sub-paragraph; and

• (b) the employee’s prior written consent to that sale and the recovery of all or part of the under-deduction from the proceeds thereof, shall be required.

• (13) Subject to sub-paragraph (14), the employer shall record on the deductions working sheet for that employee the name and national insurance number of the employee, the year to which the working sheet relates, the appropriate category letter in relation to the employee (being the appropriate category letter indicated by the Board) and, in so far as relevant to that category letter, the following particulars regarding every payment of ... earnings which he makes to the employee namely—

• (a) the date of payment;

• (b) the amount of—

• (i) earnings up to and including the current lower earnings limit where earnings equal or exceed that figure,

• (ii) earnings which exceed the current lower earnings limit but do not exceed the current primary threshold,

• (iii) earnings which exceed the current primary threshold but do not exceed the current upper earnings limit,

• (iiia) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (iv) the sum of the primary Class 1 contributions and secondary Class 1 contributions payable on all the employee’s earnings, other than contributions recovered under sub-paragraph (3); and

• (v) the primary Class 1 contributions payable on the employee’s earnings;

• (vi) any statutory maternity pay;

• (vii) any ... statutory paternity pay;

• (viia) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (viii) any statutory adoption pay; ...

• (ix) any statutory shared parental pay; and

• (x) any statutory parental bereavement pay ; and

• (xi) any statutory neonatal care pay.

...

• (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (14) Where 2 or more payments of ... earnings fall to be aggregated, the employer, instead of recording under heads (iv) and (v) of sub-paragraph (13)(b) separate amounts in respect of each such payment, shall under each head record a single amount, being the total of the contributions appropriate to the description specified in that head, in respect of the aggregated payments.

• (15) When an employer pays ... earnings he shall record under the name of the employee to whom he pays the ... earnings—

• (a) the date of payment;

• (b) the amount of the ... earnings, excluding any allowable pension contributions; and

• (c) any allowable pension contributions;

and retain the record for a period of three years after the end of the tax year in which the ... earnings were paid.

Records where liability transferred from secondary contributor to employed earner: relevant employment income

8

Where an election has been made for the purposes of paragraph 3B(1) of Schedule 1 to the Act (elections about transfer of liability for secondary contributions in respect of relevant employment income), the secondary contributor shall maintain records containing—

• (a) a copy of any such election;

• (b) a copy of the notice of approval issued by the Inland Revenue under paragraph 3B(1)(b) of that Schedule;

• (c) the name and address of the secondary contributor who has entered into the election;

• (d) the name of the employed earner; and

• (e) the national insurance number allocated to the employed earner.

Certificate of contributions paid

9

• (1) Where the employer is required to give the employee a certificate in accordance with regulation 67 of the PAYE Regulations (information to employees about payments and tax deducted (Form P 60)), the employer shall enter on the certificate, in respect of the year to which the certificate relates—

• (a) the amount of any earnings up to and including the current lower earnings limit where earnings equal or exceed that figure;

• (b) the amount of any earnings in respect of which primary Class 1 contributions were, by virtue of section 6A of the Act, treated as having been paid, which exceed the current lower earnings limit but do not exceed the current primary threshold...;

• (c) the amount of any earnings in respect of which primary Class 1 contributions were payable which exceed the current primary threshold but do not exceed the current upper earnings limit...;

• (ca) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (d) the amount of the earnings, if any, recorded under paragraphs (b) and (c), above the current lower earnings limit, in respect of which primary Class 1 contributions were payable or, where section 6A of the Act and regulation 127 applies, were treated as having been paid, at the reduced rate;

• (e) the amount of primary Class 1 contributions paid by the employee;

• (f) the amount of statutory maternity pay paid to the employee;

• (g) the amount of ... statutory paternity pay paid to the employee;

• (ga) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...

• (h) the amount of statutory adoption pay paid to the employee; ...

• (i) the amount of statutory shared parental pay paid to the employee; and

• (j) the amount of statutory parental bereavement pay paid to the employee;; and

• (k) the amount of statutory neonatal care pay paid to the employee;

and shall enter the amounts under paragraph (e) under the appropriate category letter indicated by the Inland Revenue.

• (2) Where the employer is not required to give the employee a certificate in accordance with regulation 67 of the PAYE Regulations, because no tax has been deducted from the employee’s relevant payments during the year concerned..., but the employee—

• (a) has paid, or

• (b) is treated, by virtue of section 6A of the Act, as having paid,

primary Class 1 contributions in that year, the employer shall nevertheless give the employee such a certificate showing the information referred to in sub-paragraph (1).

• (3) In sub-paragraph (2), “relevant payments” has the meaning given in the PAYE Regulations.

PART III — PAYMENT AND RECOVERY OR EARNINGS-RELATED CONTRIBUTIONS, CLASS 1A CONTRIBUTIONS AND CLASS 1B CONTRIBUTIONS, ETC.

Payment of earnings-related contributions monthly by employer

10

• (1) Subject to sub-paragraph (1A) and paragraph 11 and 15(8), the employer shall pay the amount specified in sub-paragraph (2) to the Inland Revenue within 14 days or, if payment is made by an approved method of electronic communications in respect of earnings paid after 5th April 2004, within 17 days of the end of every ... tax month.

• (1A) This paragraph does not apply in respect of amounts of retrospective earnings.

• (2) The amount specified in this sub-paragraph is the total amount of earnings-related contributions due in respect of ... earnings paid by the employer in that ... tax month, (and, where required, reported under paragraph 21A or 21D) other than amounts deductible under paragraph 7(2) which he did not deduct and amounts which he deducted under the Compensation of Employers Regulations....

• (3) For the purposes of sub-paragraph (2), if two or more payments of ... earnings fall to be aggregated, the employer shall be treated as having deducted from the last of those payments the amount of any earnings-related contributions deductible from those payments which he did not deduct from the earlier payments.

• (3A) The amount specified in sub-paragraph (2) must be adjusted to take account of errors corrected under paragraph 21E(5), other than in cases where paragraph 21E(4) applies, or failures rectified under paragraph 21EA(2).

• (4) Where the amount specified in sub-paragraph (2) has been adjusted to take account of an error as provided for in sub-paragraph (3A) and the value of the adjustment is a negative amount, that amount is treated as having been paid to HMRC—

• (a) 17 days after the end of the tax month in which the correction is made if payment is made using an approved method of electronic communications, and

• (b) 14 days after the end of the tax month in which the correction is made, in any other case.

Payments of earnings-related contributions quarterly by employer

11

• (1) Subject to sub-paragraph (1A) and paragraph 15(8), the employer shall pay the amount specified in sub-paragraph (2) to the Inland Revenue within 14 days of the end of every ... tax quarter or, if payment is made by an approved method of electronic communications in respect of earnings paid after 5th April 2004, within 17 days of the end of every tax quarter where—

• (a) the employer has reasonable grounds for believing that the condition specified in sub-paragraph (4) applies and chooses to pay the amount specified in sub-paragraph (2) quarterly; or

• (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (1A) This paragraph does not apply in respect of amounts of retrospective earnings.

• (2) The amount specified in this sub-paragraph is the total amount of earnings-related contributions due in respect of ... earnings paid by the employer in that ... tax quarter, (and, where required, reported under paragraph 21A or 21D) other than amounts deductible under paragraph 7(2) which he did not deduct and amounts which he deducted under the Compensation of Employers Regulations....

• (3) For the purposes of sub-paragraph (2), where two or more payments of ... earnings fall to be aggregated, the employer shall be deemed to have deducted from the last of those payments the amount of any earnings-related contributions deductible from those payments which he did not deduct from the earlier payments.

• (3A) The amount specified in sub-paragraph (2) must be adjusted to take account of errors corrected under paragraph 21E(5), other than in cases where paragraph 21E(4) applies, or failures rectified under paragraph 21EA(2).

• (3B) Where the amount specified in sub-paragraph (2) has been adjusted to take account of an error as provided for in sub-paragraph (3A) and the value of the adjustment is a negative amount, that amount is treated as having been paid to HMRC—

• (a) 17 days after the end of the tax quarter in which the correction is made if payment is made using an approved method of electronic communications, and

• (b) 14 days after the end of the tax quarter in which the correction is made, in any other case.

• (4) The condition specified in this sub-paragraph is that for tax months falling within the current year, the average monthly amount found by the formula below will be less than £1500.

The formula is—

(N + P + L + S) − (SP + CD)

$The expressions used in the formula have the following values. Nis the amount which would be payable to the Inland Revenue under the Social Security Contributions and Benefits Act 1992 and these Regulations but disregarding—any amount of secondary Class 1 contributions in respect of which liability has been transferred to the employed earner by an election made jointly by the employed earner and the secondary contributor for the purpose of paragraph 3B(1) of Schedule 1 to the Act (transfer of liability to be borne by the earner); andany amount payable in respect of retrospective earnings;... “P” is the amount which would be payable to HMRC under regulation 67G or 68 of the PAYE Regulations but disregarding any amount payable in respect of retrospective employment income (within the meaning of regulation 2 of those Regulations); L is the amount which would be payable to the Inland Revenue under regulation 54(1) of the Education (Student Loans) (Repayment) Regulations 2009 (payment of repayments deducted to HMRC) if the reduction referred to in paragraph (3) of that regulation ...were disregarded. S is the sum of the amounts which the employer would be liable to deduct, under section 559 of the Taxes Act and the Income Tax (Sub-contractors in the Construction Industry) Regulations 1993, from payments made by him.... SP is the amount—recoverable by the employer from the Inland Revenue, ordeductible from amounts for which the employer would otherwise be accountable to the Inland Revenue,in respect of payments to his employees by way of ... statutory maternity pay, statutory paternity pay, statutory shared parental pay, statutory adoption pay and statutory parental bereavement pay , statutory parental bereavement pay and statutory neonatal care pay. CD is the amount which would be deducted by others from sums due to the employer, in his position as a sub-contractor, under section 559 of the Taxes Act.$

Payment of earnings-related contributions by employer (further provisions)

12

• (1) The Inland Revenue shall give a receipt to the employer for the total amount paid under paragraph 10, 11 or 11A if so requested, but if a receipt is given for the total amount of earnings-related contributions and any tax paid at the same time, a separate receipt need not be given for earnings-related contributions.

• (2) Subject to sub-paragraph (3), if the employer has paid to the Inland Revenue on account of earnings-related contributions under paragraph 10, 11 or 11A an amount which he was not liable to pay, or which has been refunded in accordance with regulation 2 of the Social Security (Refunds) (Repayment of Contractual Maternity Pay) Regulations 1990 (refunds of contributions), the amounts which he is liable to pay subsequently in respect of other payments of ... earnings made by him during the same year shall be reduced by the amount overpaid, so however that if there was a corresponding over-deduction from any payment of ... earnings to an employee, this paragraph shall apply only in so far as the employer has reimbursed the employee for that over-deduction.

• (3) Sub-paragraph (2) applies only if—

• (a) the over-deduction occurred by reason of an error by the employer in good faith;

• (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (c) a refund has been made under regulation 2 of the Social Security (Refunds) (Repayment of Contractual Maternity Pay) Regulations 1990.

Payment of Class 1B contributions

13

• (1) A person who is liable to pay a Class 1B contribution (“the employer”), shall pay that Class 1B contribution to the Inland Revenue not later than 19th October or, if payment is made by an approved method of electronic communications in respect of earnings paid after 5th April 2004, not later than 22nd October in the year immediately following the end of the year in respect of which that contribution is payable.

• (2) If the employer has paid to the Inland Revenue under this paragraph an amount in respect of Class 1B contributions which he was not liable to pay, he shall be entitled to deduct the amount overpaid from any payment in respect of secondary earnings-related contributions which he is liable to pay subsequently to the Inland Revenue under paragraph 10 or 11 for any ... tax period in the same year.

Employer failing to pay earnings-related contributions

14

• (1) If within 17 days of the end of any ... tax period a non-Real Time Information employer has paid no amount of earnings-related contributions to the Inland Revenue under paragraph 10 or 11 for that ... tax period and the Inland Revenue is unaware of the amount, if any, which the employer is liable so to pay, the Inland Revenue may give notice to the employer requiring him to render, within 14 days, a return in the prescribed form showing the amount of earnings-related contributions which the employer is liable to pay to the Inland Revenue under that paragraph in respect of the ... tax period in question.

• (2) Where a notice given by the Inland Revenue under sub-paragraph (1) extends to two or more consequent income tax periods, the provisions of this Schedule shall have effect as if those ... tax periods were one ... tax period.

• (3) If the Inland Revenue is not satisfied that an amount of earnings-related contributions paid ... under paragraph 10 or 11 for any ... tax period is the full amount which the employer is liable to pay..., the Inland Revenue may give a notice under sub-paragraph (1) despite the payment of that amount.

Specified amount of earnings-related contributions payable by the employer

15

• (1) If after 17 days following the end of any ... tax period the employer has paid no amount of earnings-related contributions to HMRC under paragraph 10 or 11 for that ... tax period and there is reason to believe that the employer is liable to pay such contributions, HMRC, upon consideration of the employer’s record of past payments whether of earnings-related contributions or of combined amounts, may to the best of their judgment specify the amount of earnings-related contributions or of a combined amount which they consider the employer is liable to pay and give notice to him of that amount.

• (1A) For the purposes of this paragraph “combined amount” is an amount which includes earnings-related contributions due under these regulations and one or more of the following—

• (a) tax due under the PAYE Regulations;

• (b) amounts due under the Income Tax (Construction Industry Scheme) Regulations 2005;

• (c) payments of repayments of student loans due under the Education (Student Loans) (Repayment) Regulations 2009.

• (1B) In arriving at an amount under paragraph (1), HMRC may also take into account any returns made by the employer under this Schedule in the tax period in question or earlier tax periods.

• (2) If, on the expiration of the period of 7 days allowed in the notice, the specified amount ... or any part thereof is unpaid, the amount so unpaid—

• (a) shall be treated for the purposes of this Schedule as an amount of earnings-related contributions or as including an amount of earnings-related contributions which the employer was liable to pay for that ... tax period in accordance with paragraph 10 or 11; and

• (b) may be certified by HMRC.

• (3) The provisions of sub-paragraph (2) shall not apply if, during the period allowed in the notice, the employer pays to HMRC the full amount of earnings-related contributions which the employer is liable to pay under paragraph 10 or 11 for that ... tax period, or the employer satisfies HMRC that no amount of such contributions is due.

• (4) The production of a certificate such as is mentioned in sub-paragraph (2) shall, until the contrary is established, be sufficient evidence that the employer is liable to pay to HMRC the amount shown in it; and any document purporting to be such a certificate as aforesaid shall be deemed to be such a certificate until the contrary is proved.

• (5) Where the employer has paid no amount of earnings-related contributions under paragraph 10 or 11 for any ... tax periods, a notice may be given by HMRC under sub-paragraph (1) which extends to two or more consecutive ... tax periods, and this Schedule shall have effect as if those ... tax periods were the latest ... tax period specified in the notice.

• (6) A notice may be given by HMRC under sub-paragraph (1) notwithstanding that an amount of earnings-related contributions has been paid ... by the employer under paragraph 10 or 11 for any ... tax period, if, after seeking the employer’s explanation as to the amount of earnings-related contributions paid, HMRC is not satisfied that the amount so paid is the full amount which the employer is liable to pay ... for that period, and this paragraph shall have effect accordingly, save that sub-paragraph (2) shall not apply if, during the period allowed in the notice, the employer satisfies HMRC that no further amount of earnings-related contributions is due for the relevant ... tax period.

• (7) Where, during the period allowed in a notice given by HMRC under sub-paragraph (1), the employer claims, but does not satisfy HMRC, that the payment ... made in respect of any ... tax period specified in the notice is or includes the full amount of earnings-related contributions he is liable to pay to HMRC for that period, the employer may require HMRC to inspect the employer’s documents and records as if HMRC had called upon the employer to produce those documents and records in accordance with Schedule 36 to the Finance Act 2008 (information and inspection powers) and the provisions of paragraph 26A shall apply in relation to that inspection, and the notice given by HMRC under sub-paragraph (1) shall be disregarded in relation to any subsequent time.

• (8) Notwithstanding anything in this paragraph, if the employer pays any amount of earnings-related contributions certified by HMRC under it whether separately or as part of a combined amount and that amount exceeds the amount which he would have been liable to pay in respect of that ... tax period apart from this paragraph, he shall be entitled to set off such excess against any amount which he is liable to pay to HMRC under paragraph 10 or 11 for any subsequent ... tax period.

• (9) If, after the end of the year, the employer renders the return required by paragraph 22(1) and the total earnings-related contributions he has paid in respect of that year in accordance with this Schedule exceeds the total amount of such contributions due for that year, any excess not otherwise recovered by set-off shall be repaid.

Recovery of earnings-related contributions or Class 1B contributions

16

• (1) The ... Tax Acts and any regulations under section 684 of ITEPA 2003 (PAYE regulations) relating to the recovery of tax shall apply to the recovery of—

• (a) any amount of earnings-related contributions which an employer is liable to pay HMRC for any ... tax period in accordance with paragraph 10 or 11 or which he is treated as liable to HMRC whether separately or as part of a combined amount for any ... tax period under paragraph 15; or

• (b) any amount of Class 1B contributions which an employer is liable to pay to the HMRC in respect of any year in accordance with paragraph 13(1),

as if each of those amounts had been charged to tax by way of an assessment on the employer as employment income under ITEPA 2003.

• (2) Sub-paragraph (1) is subject to the qualification that, in the application to any proceedings taken, by virtue of this paragraph, of any of the relevant provisions limiting the amount which is recoverable in those proceedings, there shall be disregarded any other component of a combined amount which may, by virtue of sub-paragraphs (3) to (5), be included as part of the cause of action or matter of complaint in those proceedings.

• (3) Proceedings may be brought for the recovery of the total amount of—

• (a) earnings-related contributions which the employer is liable to pay to HMRC for any ... tax period;

• (b) Class 1B contributions which the employer is liable to pay to HMRC in respect of any year;

• (c) a combination of those classes of contributions as specified in heads (a) and (b); or

• (d) any of the contributions as specified in heads (a), (b), or (c) in addition to any other component of a combined amount which the employer is liable to pay to HMRC for any ... tax period,

without specifying the respective amount of those contributions and of other component of a combined amount, or distinguishing the amounts which the employer is liable to pay in respect of each employee and without specifying the employees in question.

• (4) For the purposes of—

• (a) proceedings under section 66 of the Taxes Management Act 1970 (including proceedings under that section as applied by the provisions of this paragraph);

• (b) summary proceedings (including in Scotland proceedings in the sheriff court or in the sheriff’s small debt court),

the total amount of contributions, in addition to any other component of the combined amount which the employer is liable to pay to HMRC for any ... tax period, referred to in sub-paragraph (3) shall, subject to sub-paragraph (2), be one cause of action or one matter of complaint.

• (5) Nothing in sub-paragraph (3) or (4) shall prevent the bringing of separate proceedings for the recovery of each of the several amounts of—

• (a) earnings-related contributions which the employer is liable to pay for any ... tax period in respect of each of his several employees;

• (b) Class 1B contributions which the employer is liable to pay in respect of any year in respect of each of his several employees; ...

• (c) tax which the employer is liable to pay for any ... tax period in respect of each of his several employees.

• (d) amounts due under the Income Tax (Construction Industry Scheme) Regulations 2005; or

• (e) payments of repayments of student loans due under the Education (Student Loans) (Repayment) Regulations 2009.

• (6) For the purposes of this paragraph “combined amount” has the meaning given in paragraph 15(1A).

Interest on overdue earnings-related contributions or Class 1B contributions

17

• (1) Subject to sub-paragraph (4A) and paragraph 21, where, in relation to the year ended 5th April 1993 or any subsequent year, an employer has not—

• (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (b) paid a Class 1B contribution by 19th October or, if payment is made by an approved method of electronic communications in respect of earnings paid after 5th April 2004, not later than 22nd October next following the year in respect of which it was due,

any contribution not so paid shall carry interest at the rate applicable under paragraph 6(3) of Schedule 1 to the Act from the reckonable date until payment.

• (2) Interest payable under this paragraph shall be recoverable as if it were an earnings-related contribution or a Class 1B contribution, as the case may be, in respect of which an employer is liable under paragraph 10, 11, or 13 to pay to HMRC.

• (3) For the purposes of this paragraph—

• (a) “employer” means, in relation to a Class 1B contribution, the person liable to pay such a contribution in accordance with section 10A of the Act;

• (b) “the reckonable date” means, in relation to—

• (i) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (ii) a Class 1B contribution, the 19th October or, if payment was made by an approved method of electronic communications in respect of earnings paid after 5th April 2004, the 22nd October next following the year in respect of which it was due.

• (iii) a contribution payable in respect of retrospective earnings relating to a tax year which is closed at the time that the relevant retrospective contributions regulations come into force, the 14th day after the end of the tax month immediately following the tax month in which those regulations came into force.

• (4) A contribution to which sub-paragraph (1) applies shall carry interest from the reckonable date even if the date is a non-business day within the meaning of section 92 of the Bills of Exchange Act 1882.

• (4A) Where an employer has not paid contributions in respect of retrospective earnings relating to a closed tax year by the date set out in paragraph 11A, any contribution not so paid shall carry interest at the rate applicable under paragraph 6(3) of Schedule 1 to the Act from the reckonable date until payment.

• (5) A certificate of HMRC that, to the best of their knowledge and belief, any amount of interest payable under this paragraph has not been paid by an employer or employee is sufficient evidence that the amount mentioned in the certificate is unpaid and due to be paid, and any document purporting to be such a certificate shall be presumed to be a certificate until the contrary is proved.

• (6) HMRC may prepare a certificate certifying the total amount of interest payable in respect of the whole or any component of a combined amount without specifying what component of the combined amount the interest relates to.

Sub-paragraph (5) shall apply, with any necessary modifications, to the certificate.

• (7) For the purposes of this paragraph “combined amount” has the meaning given in paragraph 15(1A).

Payment of interest on repaid earnings-related contributions or Class 1B contributions

18

• (1) Where an earnings-related contribution paid by an employer in respect of the year ended 5th April 1993 or any subsequent year not later than the year ended 5th April 1999 is repaid to him and that repayment is made after the relevant date, any such repaid contribution shall carry interest at the rate applicable under paragraph 6(3) of Schedule 1 to the Act from the relevant date until the order for the repayment is issued.

• (2) For the purposes of sub-paragraph (1) “the relevant date” is—

• (a) in the case of an earnings-related contribution overpaid more than 12 months after the end of the year in respect of which the payment was made, the last day of the year in which it was paid; and

• (b) in any other case, the last day of the year after the year in respect of which the contribution in question was paid.

• (3) Where ... a Class 1B contribution paid by an employer in respect of the year ended 5th April 2000 or any subsequent year is repaid to him and that repayment is made after the relevant date, any such repaid contribution shall carry interest at the rate applicable under paragraph 6(3) of Schedule 1 to the Act from the relevant date until the order for the repayment is issued.

• (4) For the purpose of sub-paragraph (3) “the relevant date” is—

• (a) in the case of—

• (i) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (ii) a Class 1B contribution, the 19th October next following the year in respect of which that contribution was paid; or

• (b) the date on which the ... Class 1B contribution was paid if that date is later than the date referred to in paragraph (a).

Repayment of interest

19

Where a secondary contributor or a person liable to pay a Class 1B contribution has paid interest on an earnings-related contribution or a Class 1B contribution, that interest shall be repaid to him if—

• (a) the interest paid is found not to have been due to be paid, although the contribution in respect of which it was paid was due to be paid;

• (b) the earnings-related contribution or Class 1B contribution in respect of which interest was paid is returned or repaid to him in accordance with the provisions of regulation 52, 52A or 55.

Remission of interest for official error

20

• (1) Where interest is payable in accordance with paragraph 17, or section 101 of the Finance Act 2009 in relation to any earnings-related contribution, it shall be remitted for the period commencing on the first relevant date and ending on the second relevant date in the circumstances specified in sub-paragraph (2).

• (2) For the purposes of sub-paragraph (1), the circumstances are that the liability, or a greater liability, to pay interest in respect of an earnings-related contribution or a Class 1B contribution arises as the result of an official error being made.

• (3) In this paragraph—

• (a) “an official error” means a mistake made, or something omitted to be done, by an officer of the Board, where the employer or any person acting on his behalf has not caused, or materially contributed to, that mistake or omission;

• (b) “the first relevant date” means the reckonable date as defined in paragraph 17(3) or, if later, the date on which the official error occurs;

• (c) “the second relevant date” means the date 14 days after the date on which the official error has been rectified and the employer is advised of its rectification.

Application of paragraphs 10, 12, 16, 17, 18, 19 and 20

21

• (1) This paragraph applies where—

• (a) secondary Class 1 contributions are payable in respect of relevant employment income; and

• (b) an amount or proportion (as the case may be) of the liability of the secondary contributor to those contributions is transferred to the employed earner by an election made jointly by them for the purposes of paragraph 3B(1) of Schedule 1 to the Act.

• (2) Paragraphs 10, 12, 16, 17, 18, 19 and 20 shall apply to the employed earner to the extent of the liability transferred by the election and, to that extent, those paragraphs shall not apply to the employer.

• (3) For the purposes of sub-paragraph (2)—

• (a) any reference in paragraphs 10, 12, 16, 17, 18 and 20 to an employer; and

• (b) the reference in paragraph 19 to a secondary contributor,

shall be construed as a reference to the employed earner to whom the liability is transferred by the election.

Return by employer at end of year

22

• (A1) This paragraph applies to—

• (a) non-Real Time Information employers;

• (b) Real Time Information employers in relation to years in which they were, for the whole of the year, non-Real Time information employers; and

• (c) Real Time Information employers to whom HMRC has given a notice requiring a return under regulation 73 of the PAYE Regulations (annual return of relevant payments liable to deduction of tax (Forms P35 and P14) in respect of a tax year.

• (1) Before 20th May following the end of the year the employer shall render to HMRC in such form as they may approve or prescribe, a return showing in respect of each employee, in respect of whom he was required at any time during the year to prepare or maintain a deductions working sheet in accordance with this Schedule—

• (a) such particulars as HMRC may require for the identification of the employee,

• (b) the year to which the return relates,

• (c) in respect of each and under each of the category letters, the total amounts for the year shown under—

• (i) each of sub-paragraphs (i) to (v) severally of paragraph 7(13)(b) (such amounts being rounded down to the next whole pound if not already whole pounds) in the case of paragraphs (i) to (iii)),

• (ii) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (iii) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (d) the total amount of any statutory maternity pay paid during the year; ...

• (da) the total amount of ... statutory paternity pay paid during the year;

• (daa) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (db) the total amount of statutory adoption pay paid during the year; ...

• (dc) the total amount of statutory shared parental pay paid during the year; and

• (dd) the total amount of statutory parental bereavement pay paid during the year.; and

• (de) the total amount of statutory neonatal care pay paid during the year.

• (e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (2) The return required by sub-paragraph (1) shall include a statement and declaration in the form approved or prescribed by HMRC containing a list of all deductions working sheets on which the employer was obliged to keep records in accordance with this Schedule in respect of that year, and shall also include a certificate showing—

• (a) the total amount of earnings-related contributions payable by him in respect of each employee during that year;

• (b) the total amount of earnings-related contributions payable in respect of all his employees during that year;

• (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .