If there is no legal obligation to make a payment because it is
not provided for in the contract of employment (See
NIM02040) it will still be liable for
NICs if there is a custom in the particular employment of making
such payments.
An example of such a payment might be a retirement gratuity
payable to employees of a particular grade within a company. If the
company is in the habit of always making payments to employees
within that grade upon their retirement it will be well known among
those employees that such a payment will be available when they
retire. The payment therefore forms part of the terms under which
they provide their services and will be earnings for the purposes
of NICs. (See
NIM02010)
