Lecturers, Teachers and Instructors – Complicated and Confusing NICs Treatment to be RepealedSaturday, February 18th, 2012
In certain circumstances, the Social Security (Categorisation of Earners) Regulations 1978 and the Northern Ireland equivalent requires that a self-employed lecturer, teacher, instructor or similar be treated as an employee for NICs purposes. The historic reasons for this are that the working conditions of the self-employed person are similar to those of the employed person. Plus, there is deemed to be insecurity in the self-employment status, therefore, payment of Class 1 NICs would afford the individual an entitlement to contributory State benefits. The tax treatment is unaffected – therefore, tax is as a self-employed person, NICs are as an employee.
A consultation in 2009 recognised the difficulties in operating these rules and concluded that further HMRC guidance would not help and that the Regulations themselves needed to be amended. However, the consultation responses, published in March 2010 were not supportive of this and, indeed, questioned whether they were appropriate at all. Planned changes were halted and the confusing 1978 Regulations continued to apply.
In October 2011, the Government published a further consultation document indicating that HMRC believed the 1978 rationale behind the Regulations no longer applied but considered four options:
- Do nothing (and continue with the 1978 Regulations)
- Extend the Regulations to cover all vocational training
- Amend the Regulations so that they are relevant in only traditional education establishments
- Repeal them altogether
The consultation closed on 06 January 2012 and the response has now been published. In short, 19 out of 20 responses supported repealing the Regulations and the necessary Statutory Instruments to repeal the Regulations will be laid before Parliament to be effective 06 April 2012.
These were confusing Regulations to operate in practice and, together with the majority of respondents, we welcome their repeal.
- HMRC – Summary of Responses: Categorisation of Earners Regulations 1978
- Payroll Help 14 October 2011 – Employment Status of Lecturers, Teachers and Instructors