The Social Security (Contributions) (Amendment No. 3) Regulations 2024
Citation and commencement1.
Amendment of the Social Security (Contributions) Regulations 20012.
(1)
(2)
In regulation 1(2) (citation, commencement and interpretation)—
(a)
““advance payment” for the purposes of regulation 7 and paragraph 21AE of Schedule 4 means a payment of earnings that—
(a)
is not made at a regular interval6,(b)
is for an amount that would otherwise be included in the payment at the next regular interval that follows the making of the payment of earnings, and
(c)
does not exceed the amount that, at the time that payment of earnings is made, reasonably represents completed service in respect of which no other payment of earnings has been made;”,
(b)
““completed service” means work undertaken or obligations performed by the earner in accordance with the earner’s contract with the employer;”,
(c)
““reduced regular interval payment” means a payment of earnings made at a regular interval that has been reduced by reference to advance payments made to the earner;”.
(3)
In regulation 7 (treatment of earnings paid otherwise than at regular intervals)—
(a)
in regulation (3) at the beginning insert, “Subject to paragraph (3A)”
, and
(b)
“(3A)
Paragraph (3) does not apply in a case falling within paragraph (1)(a) where—
(a)
the regular interval at which payment of earnings would normally fall to be made is no shorter than a week and no longer than a month,
(b)
an advance payment is made to the earner, and
(c)
a reduced regular interval payment is made to the earner.”.
(4)
“Employees paid advance payments of earnings21AE.
(1)
Sub-paragraph (2) applies where an employer—
(a)
normally makes a payment of earnings to an employee at regular intervals of no shorter than a week and no longer than a month,
(b)
makes an advance payment8 to the employee, and(c)
makes a reduced regular interval payment to the employee.
(2)
Where this paragraph applies—
(a)
the requirements of paragraphs 6(1)(a)9 (deduction of earnings-related contributions), 7(13)10 (calculation of deduction), 21A (real time returns of information about payments of earnings) and Schedule 4A11 (real time returns) do not apply to advance payments in the period beginning with the making of the advance payment and ending with the making of the reduced regular interval payment, and(b)
the reduced regular interval payment and advance payments made in respect of it must be treated for the purposes of paragraphs 6(1)(a), 7(13), 21A and Schedule 4A as if they were a single payment of earnings made at the time the reduced regular interval payment is made.
(3)
In this paragraph “regular interval” has the meaning given in regulation 1(2) of these Regulations.”.
These Regulations amend the Social Security (Contributions) Regulations 2001 (S.I. 2001/1004) (“the 2001 Regulations”).
Regulation 2(3) inserts a new paragraph (3A) into regulation 7 of the 2001 Regulations to allow an advance payment of earnings made in one tax year to be treated as if it were a payment of earnings made at regular interval; despite the regular interval date falling in another tax year, resulting in the payment being treated as made in another tax year. Regular interval is defined in regulation 1(2) of the 2001 Regulations and only includes intervals in accordance with an express or implied agreement between the employed earner and the secondary contributor, as to the intervals at which payments of earnings normally fall to be made, being intervals of substantially equal length.
Regulation 2(4) inserts new paragraph 21AE into Schedule 4 to the 2001 Regulations to determine how an employer should treat certain advance payment of earnings for the purposes of paragraphs 6(1)(a), 7(13) and 21A of Schedule 4 and Schedule 4A. Paragraph 6(1)(a) requires an employer to prepare a deductions working sheet for an employee when making a payment of earnings. Paragraph 7(13) requires an employer to record details about every payment of earnings made to the employee in a deductions working sheet. Paragraph 21A sets out requirements for real time returns of information, including the time by which the employer must deliver the information to His Majesty’s Revenue and Customs.
Paragraph 21AE provides that, in respect of both the deductions working sheet and returns to HMRC, the employer must treat certain advance payments and the reduced regular interval payment that follows them as a single payment, made on the date that the reduced regular interval payment is made.
A Tax Information and Impact Note has not been prepared in relation to these changes as they contain no substantive changes to NICs policy.