On 20 April 2016, HMRC published a consultation document proposing to abolish the mechanism whereby an employee and employer may jointly elect to transfer a liability for employer (Class 1) national insurance contributions (NICs) to the employee, where such NICs arise in respect of specified chargeable events in connection with employment-related securities and options.
Unlike the other mechanism for an employee to be required to meet an employer NICs liability, whereby the employee simply agrees to indemnify an employer for such NICs, a joint election constitutes a legal transfer of the liability to the employee. The election must also, currently, be approved in advance by HMRC.
HMRC appear to be concerned as to the administrative burden of the joint election route, and therefore keen to remove this paper-based process. The consultation does, however, recognise that the joint election route gives greater certainty than the agreement route.
The consultation makes it clear there are no plans to take away the ability for an employee to enter into an agreement to meet the cost of employer NICs.
To view the consultation, click here.