Postponement of NICs Bill - impact on payroll software changes for class 1A

15 November 2017

HMRC’s Software Developers Support Team (SDST) has provided the following update for the payroll profession:

“What has happened?

On 2 November, the government announced that they will introduce the National Insurance Contributions (NICs) Bill in 2018. The measures it will implement will now take effect one year later, from April 2019. This includes the abolition of class 2 NICs, reforms to the NICs treatment of termination payments, and changes to the NICs treatment of sporting testimonials

The one year delay to the implementation of the NICs Bill means that the new employer charge on termination payments over £30,000 will now start from April 2019. Other changes to the income tax and NICs treatment of termination payments will still have effect from April 2018, subject to the will of parliament. These include income tax and class 1 NIC liability on all payments in lieu of notice and the removal of Foreign Service Relief for employees resident in the UK. These changes will not require any changes to software. Additional communications and guidance on these elements will follow in due course. You can read the announcement in full on the parliament website.

What will happen as a result of this announcement?

HMRC has taken the decision to reverse the changes originally published in the RTI RIM Artefacts for 2018/19 to align with the new delivery of April 2019 for changes to class 1A NICs due on termination payments and sporting testimonials.

The following actions will be taken to achieve this:

  • the 2018/19 RTI RIM Artefacts and FPS schema will be amended to remove <C1ANICtermination> (data item 190) and <C1ANICterminationYTD> (data item 191). Updated Artefacts will be available within the 2018/19 technical pack on GOV.UK

  • in order to minimise the impacts on software developers, the updated FPS schema for 2018/19 will retain the existing namespace

  • the Local Test Service (LTS) and Third Party Validation Service (TPVS) will be amended to support the updated FPS message with data items 190 and 191 removed. We are working closely with our IT partners and will provide a schedule of release dates shortly

  • changes to production RTI Channel Routing Interface Service (RTI ChRIS) to validate and accept these data items as part of the Full Payment Submission (FPS) will be reversed. FPS submissions that contain data items 190 or 191 will be rejected.


What does this mean for me?

If you have updated your software for 2018/19 to include the original changes mentioned above these changes will need to be reversed and omitted from any release. Any planned or working changes in relation to the data items mentioned will also need to be suspended.

Please contact the SDS team by email if you have any queries regarding these changes.”