An employer’s contribution (or a contribution made by a third party) to the trust for each employee is earnings for NICs purposes because it is “remuneration or profit derived from an employment” within the meaning of section 3(1) of the Social Security Contributions and Benefits Act 1992. There is a liability for NICs on the payment because it is “paid to or for the benefit of an earner” as required by section 6(1) of that Act. See NIM02010 and NIM02015 for guidance on the meaning of sections 3(1) and 6(1).
Payments out of FURBS will only be liable for NICs if they are
derived from employment and are not otherwise excluded from
liability. Most payments out of FURBS are, however, capable of
being excluded from NICs by virtue of paragraph 1 of Part VI of
Schedule 3 to the Social Security (Contributions) Regulations 2001
because they can be accepted as payment of a pension. Payment by
way of a pension can include a pension commuted to a lump sum and
this is the usual form of payment out of a FURBS.
See also
NIM02158 for guidance where there is a
separate trust for each employee and
NIM02160 where there is one trust
covering a number of employees and the trust is set up as a
discretionary benefit trust.
For details of the Class NICs position on payments made from
6th April 2006:
