HMRC has concerns about directors’ National Insurance Contributions – Are yours correct?

As a director, keeping up with fast-moving tax and payroll changes is hard enough without worrying whether your own NICs are right.

HM Revenue and Customs (HMRC) has flagged a particular concern that directors on PAYE may have been miscalculating their National Insurance Contributions (NICs).

We want to help you understand the concern and what you might need to do to ensure you are still fully compliant.

What’s gone wrong with director NICs?

Whenever NIC rates change, HMRC notice that errors increase.

Unfortunately for directors on PAYE, NIC rates changed twice in 2024, once in January and again in April, and where payrolls haven’t reflected both changes correctly there’s a real risk of errors.

For directors paid through PAYE, the way NICs are calculated can be more complicated than for ordinary employees, so it’s important to check the numbers.

HMRC is urging directors on PAYE to review their NIC calculations to ensure they have paid the correct amount.

If you spot a mistake, you should correct it through PAYE where that’s possible.

If you cannot amend the position via payroll, HMRC expects you to make a voluntary disclosure.

Bear in mind that even using the voluntary-disclosure route does not guarantee penalties will be avoided.

However, timely and transparent correction usually reduces the likely charge, but you may still face fines for an earlier incorrect return.

How can directors make sure their NICs are accurate?

The best protections are the clear processes and expert oversight that are part of the service provided by accountants.

Even without rate changes, payroll and tax rules for directors can be tricky to manage, so we want to help you get it right.

We can run a review of director NICs for 2024 to confirm both rate changes were applied correctly.

For your future NICs, it is better to understand your obligations and ensure that you pay the correct amount upfront.

Not only will this improve your financial management by reducing the risk of penalties with HMRC, it will also ensure that you can focus on running your business without the spectre of non-compliance hanging over you.

As a director, your time should be spent on running and growing the business and our expert support can let you get on with it.

Don’t let changing NIC rates jeopardise your compliance with HMRC. Speak to our team today.