HMRC asks employers to feature NICs message on contractor payslips

Umbrella company employees and other contractors will see a message in their payslips that their National Insurance bill is increasing -- if HMRC gets its way.

In its February Employer Bulletin, HMRC asks that “1.25% uplift in NICs funds NHS, health & social care,” gets written onto all payslips issued from April 6th 2022 to April 5th 2023.

Asked about the request to issue the message, an HMRC spokesperson told ContractorUK: “We have asked employers to include a generic statement on all payslips from April 2022.

“[This statement is] to help employees understand the changes they will see to their contributions and that the increase will be used to fund the NHS, health and social care.”

'Political messaging'

But not everyone agrees that the message represents a “generic” statement.

Dan Neidle, partner at law firm Clifford Chance believes HMRC is trying to get employers to disseminate “political messaging”.

He explained: “[It’s an attempt to] try to ‘sell’ the National Insurance Contributions increase to employees. [This is] unprecedented and improper.”

A self-described “tax realist,” Mr Neidle took to LinkedIn to urge employers to “ignore the request,” saying “it has no legal force.”

'Slightly ridiculous'

First floated in HMRC Employer Bulletin December 2021, the message is also not a legal requirement, so HMRC won’t be issuing penalties to employers who don’t include it.

The HMRC spokesperson confirmed: “We strongly encourage employers to do this where they are able to, but it is not a mandatory requirement.”

The Revenue not making the 52-characater message compulsory is wise because the message is a bit ludicrous, according to accountant James Trowell.

“It’s slightly ridiculous to expect accountants and software providers to include such a message,” said Mr Trowell, the founder of Tax Ninja Ltd, referring to the HMRC bulletin.

He added: “HMRC invests so much in Making Tax Digital and seeking electronic communication as a way forward, yet they can’t inform people via the Government Gateway?”

'Separate deduction from April 2023'

Simon Kaskey, also an accountant, points out that the Health & Social Care Levy is effectively introduced from April 2022, when NICs for working age employees, the self-employed and employers increases by 1.25 percentage points.

But from April 2023, he said, the levy will be formally separated from NICs and then it will also apply to the earnings of individuals working above state pension age.

Of employers’ responsibilities from April 2023, the HMRC spokesperson said: “From 2023-24 the Health and Social Care Levy must be shown as a separate deduction from pay for all employees.”

'More nurses, not more bonuses, please'

But the name of the levy appears to be irking some more than the message itself because while the funds will go on health, where exactly the money will end up seems less certain.

“‘Yes’ to more beds, more nurses, more social workers, but ‘no’ to huge salary increases and bonuses for already massively well-paid senior execs,” said WTT Consulting’s Graham Webber.

Sounding concerned about the levy, and HMRC’s message request, Mr Webber added: “Last time I looked we don't have hypothecation in UK taxes. How do we know that every penny of the increase will go to the designated sector? [And] what is included in that sector [is very diverse].”

'No problem for us'

To one contractor accountant however, it’s a fuss about nothing. “Luckily, our business uses FreeAgent and they are ready and in place to implement the message into the payslips,” he said.

“So it’s no problem for us, or me -- even if I do think it doesn’t particularly make sense for employers to have to get involved with such a message.”

Similarly speaking on condition of anonymity, a contractor umbrella company said it probably would include the HMRC-requested message.

'Simply something simple to flag up the new levy'

But the company’s managing director hinted that umbrella contractor payslips were already complicated enough.

“Our [Health & Social Care Levy message] is simply going to be a simple statement which probably won’t distract from anything else,” the umbrella boss said. “Or at least I hope so, because that’s the plan.”

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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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