Running payroll for a contracted-out pension scheme

Make sure any employees you have in a contracted-out pension scheme pay the lower rate of National Insurance they’re entitled to.

You’ll also pay a lower rate of employer’s National Insurance for every employee in the scheme.

If you run a contracted-out scheme you’ll have been given a certificate by HM Revenue and Customs’ (HMRC) Pension Scheme Services.

Running your payroll

Enter your Employer Contracting Out Number (ECON) and Scheme Contracting Out Number (SCON) in your Full Payment Submission (FPS) each time you run your payroll.

Get these from your pension scheme administrator. They’re also on your certificate from HMRC.

If an employee joins your scheme

Change their National Insurance category letter - usually to ‘D’. This is used to work out their National Insurance whenever you pay them.

The rules for calculating National Insurance are different if the employee is a director.

If an employee leaves your scheme

Change their National Insurance category letter - usually to ‘A’. This is used to work out their National Insurance whenever you pay them.

Carry on reporting year-to-date information under the old category letter until the end of the tax year.

If an employee stops working for you

If you pay them within 6 weeks of leaving (eg outstanding salary or bonus), work out their National Insurance as if they’re still in your scheme. Keep using the same category letter.

After that, treat them in the same way as an employee who’s left your scheme.

You need to tell HMRC when an employee stops working for you.

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Client testimonials

Without the Growth Hubs help and assistance, we would never have been able to increase our sales & output and also grow our local business. With this help in purchasing new equipment we have expanded our operations and gained a new and increased customer base.

Nuneaton Roof Truss,

Over the past few years, Armstrongs has built up a fantastic relationship with Gary Thyeson from the Growth Hub. His advice on grants and funding has been really valuable to both Armstrongs and some of our clients. His knowledge of local business support has been helpful in signposting us to relevant support agencies as required. We look forward to working with Laura Delahunty moving forwards.

Armstrongs Accountancy LTD,

In the short time since first engaging with the Warwickshire Growth Hub we feel that Laura has understood our vision and has been so very supportive in linking us to the specialist teams who are now supporting us with training, finance and recruitment. A great service that every growing organisation should connect with

MES Systems Limited,

I have had an excellent experience working with Laura from the Growth Hub, from day one, she was taking detailed attention to my concerns and ideas. She was able to put me in contact with different organisations and people to find out answers to my questions and help me to solve some inquiries I was having. I feel this support definitely had a positive impact in my plans.

PALACIOS LTD,

It’s been a fantastic inaugural eight months for the TalentTech Recruitment team and, although the reality of setting up and running a company can be a somewhat daunting experience, we have been extremely grateful for the superb help, advice and guidance given to us along our journey by Gavin Barnett and the team at CW Growth Hub. Gavin’s introductions to both Warwick & Coventry Universities and his wider business network have been absolutely invaluable.

TalentTech Recruitment LTD,

For many individuals out there, it is very hard to figure out ways and know which direction to go when it comes to setting up a business. The challenges of taking your idea and bringing it to life and not knowing where to go and who to speak to for advice. it can get very frustrating..

King of Saffron LTD,

This grant [which we received with the help of the Growth Hub and Coventry City Council] will really help us get on track for business growth and succeed with our vision. Personally, I would also like to thank the team for supporting me through the grant application process. You have been very approachable and attentive throughout.

Exeter Analytical (UK) Limited,

Thank you for the comprehensive and professional guidance

Burbidge & Son Ltd,

Over the years since the Growth Hub was set up we have habitually gone to our Account Manager as a one-stop shop for all business-related information. It has been a really convenient way of finding suppliers, advisors and, on one occasion, we even asked for assistance with finding customers. We are invited to a wide range of business events including business development workshops, Brexit roundtable discussions, seminars on various topics and have also been asked to speak at some events. When we have needed additional information, for example, finding finance sources or help with selecti

Marchantcain Design Limited,

Thanks to CW Growth hub getting us access to grant funding we have been able to invest in the latest computer monitoring system, which will enable us to compete with the national companies within our industry.

Comrie Leisure Limited,