NIM16275 - Class 1A National
Insurance contributions: Special Class 1A NICs cases: Removal
benefits and expenses: Examples: Class 1A NICs due on removal
benefits and expenses
Section 10(1) SSCBA 1992
NIM16270
explained when Class 1A NICs may arise on certain removal
benefits and expenses. There are three examples below and
commentary which explains why Class 1A NICs are due.
Example 1 – Removal benefit provided not exempt from
income tax
Facts
- An employee earning £40,000 a year is
required to move home due to relocation of the employer’s
premises from London to Manchester.
- The employer provides the employee with
new white goods for his new residence. The goods are provided to
replace goods used at the former residence.
- The goods used at the former residence
were suitable for use at the new residence.
Commentary
- Section 285(1)(c) of ITEPA (replacement of
domestic goods provided to replace goods used at the former
residence which are unsuitable for use at the use new residence) is
not satisfied so the benefits are not removal benefits to which
section 271 of ITEPA 2003 applies (limited exemption of removal
benefits and expenses), see EIM03120.
- The goods are general earnings chargeable
to income tax under section 203 of ITEPA (see EIM21101) so section
10(1)(a) of the SSCBA 1992 (see
NIM13070) is satisfied.
- The employee is not within an excluded
employment (see section 216(1) of ITEPA 2003 and EIM20007) so is
within the benefits code because the employee earns more than
£8,500, so section 10(1)(b) of the SSCBA 1992 (see
NIM13080) is satisfied.
- The employee is provided with benefits in
kind which are disregarded from earnings under paragraph 1 of Part
2 of Schedule 3 of the SSCR 2001, so section 10(1)(c) of the SSCBA
(see
NIM13090) is satisfied.
- All the conditions in section 10 of the
SSCBA 1992 are satisfied so Class 1A NICs are due.
Example 2 – Removal benefit within section 272 of
ITEPA 2003 exceeds the taxexemption limit
Facts
- An employee earning £40,000 a year is
required to move home due to relocation of the employer’s
premises from London to Manchester.
- The employer provides the employee with
new white goods and carpets for his new residence. The goods are
provided to replace goods used at the former residence.
- The goods used at the former residence
were unsuitable for use at the new residence.
- The cost of the white goods and carpets
was £12,000.
Commentary
- Section 285(1)(c) of ITEPA 2003
(replacement of domestic goods provided to replace goods used at
the former residence which are unsuitable for use at the use new
residence) is satisfied so the benefits are removal benefits to
which the limited exemption in section271 of ITEPA 2003 applies,
see EIM03120.
- Section 287 of ITEPA 2003 limits the
exemption to the first £8,000 of removal benefits and
expenses, see EIM03103.
- The employee incurs other expenses such as
transport of belongings costs, travelling costs, etc. These when
added to the value of the removal benefits will exceed the
£8,000 limit. The amounts above £8,000 are general
earnings chargeable to income tax under section 203 of ITEPA so
section 10(1)(a) of the SSCBA 1992 is satisfied, see
NIM13070.
- The employee is within the benefits code
because the employee earns well above £8,500, so section
10(1)(b) of the SSCBA 1992 is satisfied, see
NIM13080.
- The employee is provided with benefits in
kind which are disregarded from earnings under paragraph 1 of Part
2 of Schedule 3 of the SSCR 2001, so section 10(1)(c) of the SSCBA
is satisfied, see
NIM13090.
- All the conditions in section 10 of the
SSCBA 1992 are satisfied so Class 1A NICs are due.
NIM16290
provides an example showing amounts exempt from NICs and amounts
subject to Class 1A NICs where the tax exemption limit of
£8,000 is exceeded.
