NIM08720 - Earnings Periods: Payments not paid on their usual payday: Usual payday & date of payment in different tax years

Regulation 7(1)(a) & (3) of the Social Security (Contributions) Regulations 2001 (SI 2001 No 1004)

If the usual payday and the date of payment are in different tax years, the employer:

• works out the NICs due on both payments using the NIC rates current at the time of payment; and
• must not add the payment to any other earnings due in the tax year of actual payment.

Example:

An employee is due to be paid their weekly wages on 5 April 2021 but due to a computer breakdown, receives the payment along with the wages on 12 April 2021. NICs must be worked out separately on the wages due on 5 April and 12 April. For the payment due on 5 April, because payment was actually made on 12 April, NICs must be worked out using the 2021 to 2022 contribution rates and limits.

Note

Although liability for NICs in respect of these payments must be assessed in this manner, the contributions in question may be re-allocated for benefit purposes – see NIM09800