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Peter Arrowsmith FCA outlines a selection of NIC matters, and offers a tip regarding the payment of voluntary Class 3 NIC contributions.

Late Payment Penalties

Further to the news item in my January newsletter, the draft National Insurance Regulations in respect of late in-year payments were at last published on 29 January and are available at Penalties for Late Payment of Employer and Contractor PAYE

Caring Credits Replace Home Responsibilities Protection

Home Responsibilities Protection (HRP) will be replaced with effect from 6 April 2010 by new Carers' Credits. These are actual Class 3 credits and will be governed by the Social Security (Contributions Credits for Parents and Carers) Regulations 2010 (SI 2010/19).

The main group of recipients of these credits will be those in receipt of child benefit for a child under the age of 12.

As with HRP, the new credit will be given automatically to those receiving child benefit in their own name. Partners and foster carers wishing to receive the credit must make an actual claim to HM Revenue and Customs. In the case of other carers an actual claim must be made to the Department for Work and Pensions. In either case the time limit is generally the end of the tax year following that in which the week or weeks subject to the claim fell.

Tax Health Plan

HM Revenue and Customs is calling upon medical practitioners with tax, etc., irregularities to make voluntary disclosure and settlement in exchange for a penalty limited to 10%. Since the original announcement the Plan has been extended to include not only doctors with a General Medical Council registration, but to dentists also. The Plan will work in a similar way to the New Disclosure Opportunity and will include National Insurance contributions where applicable (i.e., usually, Class 4).

Notification of the intention to disclose must be made by the end of March 2010, with settlement by the end of June 2010. Full details are at Tax Health Plan (THP)

HMRC also stresses that these favourable terms will not be offered to medical professionals again.

Personal Pension Rebates

From 6 April 2010, State Second Pension will accrue at only two rates, instead of the previous three. In line with this the planned scales of rebates paid to appropriate personal pension schemes will also change from three bands to two. This is achieved through the Pensions Act 2007 (Supplementary Provisions) (No. 2) Order 2009 (SI 2009/3094).

Tip of the Month - February 2010

A number of years ago the usual time limit on the payment of Class 3 voluntary contributions was extended for the years 1996/97 to 2001/02 inclusive. The penalty rate that generally applies where payment is made more than two years after the end of the year to which contributions relate was also suspended.

Most people had only until 5 April 2009 to make such payments. However, those who reached state pension age before 24 October 2004 have until 5 April 2010 to pay on these favourable terms. Note that 5 April is Easter Monday so, in practice, any such payments need to be received at Newcastle on or before Maundy Thursday - 1 April.

It may be that some people who have noted previously that they need to pay Class 3 for some or all of the years in question have deferred doing so in order to earn interest on the money in the meantime. There are now only a few weeks left to search out those old deficiency notices and get a cheque written and posted.

The above is taken from 'NIC Newsletter' (01/02/2010), and is reproduced with the kind permission of Peter Arrowsmith FCA, who retains the copyright.