NI Letter for pension payroll

Carole Registered Posts: 57 Regular contributor ⭐
I have been using NI catagory C for two pensioners to whom we pay a pension.

However I wonder if this is a correct as they are not employees we just pay their pension on behalf of the pension scheme and then claim the gross amount back from the pension scheme.

Can anyone advise?


  • sloshed
    sloshed Registered Posts: 100 Dedicated contributor 🦉
    Link from HMRC website you might find useful
  • payrollpro
    payrollpro Registered Posts: 427 Dedicated contributor 🦉

    In practice the NI category you use is probably irrelevant because pension payments are exempt from NIC's. The principle is that NIC is due on earnings and a pension is not earnings so cannot be used for NIC purposes.

    HMRC prefers us to use category X when processing someone on a pension only but you need to be careful if there is any possibility that they might receive pay as well.

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