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HMRC are set to close all open periods of contracting out on taxpayers’ National Insurance (NI) records. The move will be to supply individuals with details of their occupational pension rights when contracting out ends in April 2016.
HMRC are set to close all open periods of contracting out on taxpayers’ National Insurance (NI) records. The move will be to supply individuals with details of their occupational pension rights when contracting out ends in April 2016.
The Revenue will need to know which worker belongs to which contracted-out scheme, meaning employers will be legally required from the start of the new tax year on 6 April 2014 to show the relevant scheme contracted-out number (SCON), in addition to the employer’s contracting-out number (ECON), on their full payment submissions (FPS) when submitting contracted-out NI contributions.
The facility for employers to include the SCON on their FPSs is already available, although the field is optional. Each employer has one ECON under which they may have set up several SCONs.
SCONs can be found on the employers contracting out certificate. The employer should contact the pension scheme administrators if the certificate is unavailable.
Real-time information validation checks will reject a FPS received with an invalid SCON or without a SCON where NI category letters D, E, L, N or O are reported.
Where an employer cannot ascertain the correct SCON for one or more employee before April 2014, HMRC have a contingency plan to ensure firms can still submit FPS. The automatic failure error message will be used to provide a temporary valid dummy SCON to facilitate the immediate resubmission of the FPS.
