Below you will find examples of how to calculate the amount of
tax on which Class 1 NICs are due when an award is made to an
employee under a Taxed Award Scheme (TAS) and the tax liability on
the award is met by someone other than the employee. See
NIM02375 for information about NICs
liability where an award is made under a TAS.
The calculation uses the following formula:
| 100 | |
|
| 100 | – rate of tax |
An employee receives a TV costing £500 and the employer
pays the tax.
The tax on the TV is grossed-up to determine the full value
of what the employee receives (that is, the value of the TV and the
tax paid on it).
In this example:
| 100 | |
|
| 100 | -22 |
|
| = £641.02 |
Class 1 NICs are therefore due on £141.02.
Class 1A NICs will be due on £500 (the value of the
TV).
An employee receives a cash award of £800 and the employer
pays the tax on the award.
The cash award must be grossed-up to determine the full
value to the employee of the award and the tax.
| 100 | |
|
| 100 | -22 |
|
| = £1,025.64 |
Class 1 NICs are therefore due on £1.025.64.
