Q: I have two separate employment contracts with the same employer. During the day I am a school teacher, and in the evenings a lecturer at a college. The NIC is currently calculated on my total earnings. However, if my earnings could be split and NICs calculated separately on each job, there would be a considerable saving. Am I permitted to do this?
A: Where an employee has two jobs with the same employer, there is a presumption within the legislation that those earnings will be added together (aggregated) before NICs are calculated. Regulation 14 of the Social Security (Contributions) Regulations 2001 provides that it is only permissible to calculate NICs separately in each job where it is not ‘reasonably practicable’ for the employer to aggregate the earnings.
HMRC takes a robust line in requiring aggregation unless the employer has strong evidence to support the assertion that it is not ‘reasonably practicable’. There is extensive discussion on this point at https://www.gov.uk/hmrc-internal-manuals/national-insurance-manual/nim10009. Each case is looked at on its own particular merits but the following points are likely to be relevant (the list is not exhaustive):
- Is it a fact, rather than an assumption, that payroll software cannot aggregate earnings?
- Is the payroll software an outside package, tailored package, provided by an internal IT section or able to be upgraded by internal resources?
- If the system can be upgraded what are the costs?
- How many employees are potentially affected?
- What is the total number of employees on the payroll?
- Do employees have similar pay periods?
- Is aggregation a continuing requirement or a one-off consideration because of a particular project or task?
- What are the amounts of NICs at stake?
- Has there been a material change in the workforce since the decision not to aggregate was taken?
However, as you have already been aggregating the earnings for NICs you are unlikely to be able to show that it is ‘not reasonably practicable’ to continue to aggregate the earnings and you are correct to continue to calculate NIC on the total earnings.
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