Get it wrong and you could get daily interest charges.
Lots of our clients have flagged up the difficulty of working out how to ensure that their electronic payments for Class 1A National Insurance Contributions (NIC) are correctly allocated to the correct Class 1a NIC charge.
This is not just an administrative issue any more. HMRC has recently announced that they will charge daily interest on all unpaid PAYE tax, Class 1 National Insurance and Student Loan deductions. Interest will be charged daily, from the date a payment is due and payable to the date it is paid in full.
Here is HMRC’s own advice to make sure that payments are made properly:
To ensure your payment for Class 1A NICs is correctly allocated to the Class 1A NIC charge please use your 13 character Accounts Office reference followed by 1413. You can check your reference number on HMRC’s website.
For example if your Accounts Office reference is 123PA00012345, you would use 123PA000123451413 but please ensure you use your own Accounts Office reference followed by 1413, not the example Accounts Office reference used on this page. It is important that you show the reference number with no gaps between the characters, otherwise it could cause a delay in updating your records.
By using 13 as the final 2 digits of the extra 4 numbers you add to your reference, you are letting HMRC know that this payment is intended for your Class 1A NIC.
If you do not use 13 as the final 2 digits your payment will be allocated to your PAYE account (which includes Construction Industry Scheme and student loan deductions, and Class 1 NICs – not Class 1A NICs) and HMRC will contact you for your Class 1A NICs payment until the error is identified and the payment is reallocated.
This will also happen if you include your Class 1A NICs payment with your PAYE payment for the month or quarter ended 5 July 2014.
Hopefully this clarifies what you need to do. If you do have any queries about managing your tax affairs then gives us a call today on 01384 235549 or email firstname.lastname@example.org.
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