This is a freeview 'At a glance' guide to payroll year ends.

Payroll year ends: have the right boxes been ticked for director's NICs?

For payroll purposes, a director's National Insurance Contributions (NICs) are calculated by reference to annual earnings in order to prevent NIC avoidance.

Employers should check that the correct box is ticked on payroll software to ensure that NICs on any director's employment income is being calculated correctly.


During training workshops for the Schedule 24 FA 2007 regime (error in a return or document penalties) HMRC indicated that an employer would be liable to penalties if they have failed to notice if NICs were being calculated incorrectly for directors on their payroll. This would depend on the circumstances. It seems that any penalty in this situation could be suspended for a first offence.

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