Modified NIC return An easement is first available in respect of tax year 2006/07 for employers to account for NIC on certain overseas payroll payments outside normal procedures, where the employee meets all the following conditions: Is seconded to work abroad for a limited time period, but for more than one complete tax year; Is non-resident and not liable for UK tax on earnings from the relevant employment; Pays NIC on earnings in excess of the annual upper earnings limit; and Receives part of their earnings and benefits derived from the employment from sources other than the UK employer, eg, an overseas payroll. The arrangement applies where most of the employee’s earnings, to the upper earnings limit along with a ‘best estimate’ of all earnings in excess of the upper earnings limit are accounted for in the normal way, with the NIC liability being paid over monthly or quarterly (less than five persons involved) to HMRC. The best estimate includes all Class 1 NIC world-wide earnings paid from whatever source, covering salary, bonuses, non-cash benefits and share options. Estimated figures must have been entered on the employer’s main annual return Form P35and submitted to HMRC by 19 May 2007. Form P60 must have been given to the employee by 31 May 2007. The legally binding EPM 7B agreement then allows the employer to provide exact figures and pay the residual NIC using a simplified Modified NIC return, by 31 March 2008. Provided the terms of the agreement are kept, then the residual NIC and ‘second return’ attracts no penalty or interest. This easement is available for this tax year and beyond but employers must apply to their local tax office in advance of the first tax month that they wish to have included in the arrangements. Paul Tew, Pay Magazine Snowdrop provides a range of Payroll solutions that are fast, flexible and easy-to-use, to suit the many and varied needs of each organisation. To find out more about the software and services that we provide, please click here >>