HMRC flags problems with director National Insurance Contributions – Are yours correct?

For directors who have so many things to manage, keeping on top of tax and payroll changes can be a difficult task.

HM Revenue and Customs (HMRC) has warned that directors paid through PAYE may have calculated their National Insurance Contributions (NICs) incorrectly.

We want to highlight the problem and help you understand what to do if your NICs may be inaccurate.

What’s the issue with director NICs?

HMRC is aware that any year where the NIC rates change the amount of errors increases as the changes go unnoticed and unaccounted for in calculations.

In 2024 NIC rates changed twice, once in January and again in April, leading to concern that there may be more errors for this period than normal.

Where payroll systems or calculations have not reflected both adjustments, under- or over-payments can arise.

Director NIC calculations are often more complex than those for ordinary employees, so mistakes are more likely to slip through unless checked carefully.

HMRC is urging directors on PAYE to review their NIC position now.

If you find an error that can be corrected through payroll, make that amendment promptly to avoid further issues.

If it is not possible to fix the position via PAYE, you should make a voluntary disclosure to HMRC.

Bear in mind that voluntary disclosure usually reduces penalties but does not guarantee they will be waived entirely.

However, the sooner you act and the more transparent you are, the better the outcome is likely to be.

How can directors ensure their NICs are accurate?

Even at the best of times, it can be difficult for directors to keep pace with all of their financial responsibilities.

This is where having a team of accounting experts on hand to help you proves beneficial as you can relax in the knowledge that you are staying fully compliant with HMRC.

While the voluntary disclosure does exist to ensure mistakes can be corrected, it is better for everyone to submit accurate compliant filings and payments on your first attempt.

If you have any concerns about underpaying NICs, or any of your other financial obligations, we can check through your finances and calculations to make sure that there are no nasty surprises waiting for you.

For all of your future NIC bills, we can help you get the calculations right even in years with multiple rates changes.

Your focus is on growing and running a successful business, so let us keep an eye on the finances for you.

Avoid the risk of unexpected NIC bills and penalties. Speak to our team today!