Citation, commencement and effect

1. —(1) These Regulations may be cited as the Social Security (Contributions) (Amendment) Regulations 2014 and come into force on 6th April 2014.

(2) Regulation 3 has effect in relation to a payment made in relation to the tax year 2014-15 and subsequent tax years.

(3) Regulation 4 has effect in relation to expenses incurred on or after 6th April 2014.

Amendment of the Social Security (Contributions) Regulations 2001

2.The Social Security (Contributions) Regulations 2001( 9 ) are amended as provided for in regulations 3 to 10.

Amendment of regulation 67A (penalty for failure to make payments on time: Class 1 contributions)

3. In regulation 67A (penalty for failure to make payments on time: Class 1 contributions)( 10 ) after “1999.” insert—

“ (2) Regulation 69A of the PAYE Regulations (circumstances in which payment of a lesser amount is to be treated as payment in full for the purposes of paragraph 6(2) of Schedule 56 to the Finance Act 2009) ( 11 ) applies in relation to the late payment of Class 1 contributions as if—

(a) the Class 1 contributions were an amount of tax falling within item 2 of the Table in paragraph 1 of that Schedule,

(b) references to regulations 67G and 67H(2) were references to paragraphs 10 and 11 of Schedule 4 to these Regulations, and

(c) references to earnings-related contributions were references to tax deducted under the PAYE Regulations. ” ,

and as a consequence regulation 67A becomes regulation 67A(1).

Amendment of Part 8 of Schedule 3

4. Amend Part 8 (travelling, relocation and other expenses and allowances of the employment) of Schedule 3 (payments to be disregarded in the calculation of earnings for the purposes of earnings-related contributions) by inserting after paragraph 3 (travelling expenses–general)—

“ Travel by unpaid directors of not-for-profit companies

3A. —(1) A payment of, or contribution towards, the expenses of the earner’s employment if or to the extent that payment or contribution is paid wholly and exclusively for the purposes of paying or reimbursing travel expenses in respect of which conditions A to C are met.

(2) Condition A is that —

(a) the earner is obliged to incur the expenses as holder of the employment, and

(b) the expenses are attributable to the earner’s necessary attendance at any place in the performance of the duties of the employment.

(3) Condition B is that the employment is employment as a director of a not-for-profit company.

(4) Condition C is that the employment is one from which the earner receives no earnings other than sums—

(a) paid to the earner in respect of expenses, and

(b) which are so paid by reason of the employment.

(5) In this paragraph—

(a) “director” has the same meaning as in the benefits code (see section 67 of ITEPA 2003 ) ( 12 ) , and

(b) “not-for-profit company” means a company that does not carry on activities for the purpose of making profits for distribution to its members or others.

Travel where directorship held as part of a trade or profession

3B. A payment of, or contribution towards, the expenses of the earner’s employment to the extent that those expenses are travel expenses which are exempt from income tax in accordance with section 241B of ITEPA 2003 ( 13 ) (travel where directorship held as part of a trade or profession).

Travel between linked employments

3C. A payment of, or contribution towards, the expenses of the earner’s employment to the extent that those expenses are travel expenses deductible for income tax purposes in accordance with section 340A of ITEPA 2003 ( 14 ) (travel between linked employments). ” .

Amendment of Schedule 4

5.Schedule 4 (provisions derived from the Income Tax Acts and the PAYE Regulations) is amended as provided for in regulations 6 to 10.

6. In paragraph 1(2) (interpretation) in the definition of “deductions working sheet” omit from “or the form” to the end of the definition.

7. In paragraph 21A (real time returns of information about payments of general earnings)( 15 )—

(a) in sub-paragraph (1) for “sub-paragraphs (1A) and (1B)” substitute “sub-paragraph (1A)”, and

(b) for sub-paragraphs (1A) and (1B) substitute—

“ (1A) But a Real Time Information employer—

(a) which for the tax year 2014-15 meets Conditions A and B, or

(b) which for the tax year 2015-16 meets Conditions A and C,

may instead for that tax year deliver to HMRC the information specified in Schedule 4A (real time returns) in respect of every payment of general earnings made to an employee in a tax month on or before making the last payment of general earnings in that month.

(1B) Condition A is that at 5th April 2014 the employer is one to whom HMRC has issued an employer’s PAYE reference.

(1C) Condition B is that at 6th April 2014 the Real Time Information employer employs no more than 9 employees.

(1D) Condition C is that at 6th April 2015 the Real Time Information employer employs no more than 9 employees.

(1E) In this paragraph “employer’s PAYE reference” means—

(a) the combination of letters, numbers, or both, used by HMRC to identify an employer for the purposes of the PAYE Regulations, and

(b) the number which identifies the employer’s HMRC office. ” .

8. In paragraph 21D (exceptions to paragraph 21A)( 16 )—

(a) at the end of sub-paragraph (1) insert—

“ But this is subject to sub-paragraph (2B). ” ,

(b) after sub-paragraph (2A) insert—

“ (2B) This paragraph does not apply if a Real Time Information employer within sub-paragraph (1) makes a return using an approved method of electronic communications. ” , and

(c) in sub-paragraphs (3), (5) and (6) for “month”, wherever it occurs, substitute “quarter”.

9. In paragraph 21E (returns under paragraphs 21A and 21D: amendments)( 17 )—

(a) in sub-paragraph (1) for “an employer discovers an error in a return” substitute “there is an inaccuracy in a return, whether careless or deliberate,”,

(b) in sub-paragraphs (2) and (3) for “error” substitute “inaccuracy”,

(c) for sub-paragraph (5) substitute—

“ (5) When the employer becomes aware of an inaccuracy in a return under paragraph 21A or 21D, the employer must provide the correct information in the next return for the tax year in question. ” , and

(d) in sub-paragraph (7)(b) for “discovery of the error” substitute “employer becomes aware of the inaccuracy”.

10. In paragraph 31 (direct collection involving deductions working sheets)( 18 )—

(a) in sub-paragraph (1) omit the text from “HMRC may” to “30A,”,

(b) in sub-paragraph (2)—

(i) omit from “to whom” to “sub-paragraph (1)”,

(ii) for “that working sheet” which occurs immediately before “his name” substitute “a working sheet”, and

(iii) for “the year for which the deductions working sheet was issued” substitute “ the relevant tax year”,

(c) after sub-paragraph (3) insert—

“ (3A) Before 20 May 2014 the employee must deliver to HMRC a return in the prescribed form for the tax year 2013-14 showing the following information:

(a) the total amount of the general earnings and earnings-related contributions payable during the tax year 2013-14,

(b) the appropriate category letter,

(c) the employee’s name and address, and

(d) the employee’s national insurance number, and

the provisions of paragraph 22(5) regarding the certification and recovery of earnings-related contributions remaining unpaid by an employer for any year shall apply in the case of any earnings-related contributions remaining unpaid by the employee. ” ,

(d) in sub-paragraph (8) omit “issued under sub-paragraph (1)”, and

(e) in sub-paragraph (9) for “(6), (7)” substitute “(3A)”.

Jim Harra

Ruth Owen

Two of the Commissioners for Her Majesty’s Revenue and Customs

13th March 2014

Mark Lancaster

Sam Gyimah

Two of the Lords Commissioners of Her Majesty’s Treasury

12th March 2014

The Secretary of State concurs with the making of these Regulations as indicated in the preamble.

Signed by the authority of the Secretary of State for Work and Pensions.

Steve Webb

Minister of State

Department for Work and Pensions

10th March 2014

The Department for Social Development concurs with the making of these Regulations as indicated in the preamble.

Sealed with the Official Seal of the Department for Social Development on 6th March 2014

Anne McCleary

A senior official of the Department for Social Development

6th March 2014