NIM16278 - Class 1A National
Insurance contributions: Special Class 1A NICs cases: Removal
benefits and expenses: Removal expenses incurred after end of year
of assessment following year employee starts new job
Paragraph 2 of Part 8 of Schedule 3 to the SSCR 2001; Section
10(1) of the SSCBA 1992
To qualify for exemption from tax, removal expenses must be
included within section 272 ITEPA 2003 and satisfy a number of
conditions. For periods before 6 April 2003, the expenses had to be
'eligible expenses' within the meaning of Schedule 11A ICTA 1988
and satisfy the same conditions. One of those conditions is that
the expenses must be incurred before the end of the year of
assessment following the one in which the employee starts the new
job, section 264 of ITEPA 2003, see EIM03104 (before 6 April 2003
– SE03104).
NIM06120 explains that to be disregarded
from earnings so that Class 1 NICs are not due, the requirement for
an eligible expense to be incurred before the end of the year of
assessment following the one in which the employee starts the new
job, does not apply. This means that even where tax is chargeable
on eligible expenses incurred after the time limit has expired, no
Class 1 NICs are due. However, from 6 April 2000, Class 1A NICs are
due on all eligible expenses which
- are not paid within the prescribed time
limit and are therefore taxable but
- which do not attract a Class 1 NICs
liability.
Example
Facts
- An employee takes up a new employment on 1
March 2007.
- The employee earns £40,000 a
year.
- The employee’s employer reimburses
removal expenses which fall within those listed in section 272 of
ITEPA 2003 after 5 April 2008.
Commentary
- The payments do not qualify for exemption
from tax.
- No Class 1 NICs are due because they are
disregarded under paragraph 2 of Part 8 of Schedule 3 to the SSCR
2001.
- Class 1A NICs are due because all the
conditions in section 10(1) of the SSCBA 1992 are satisfied.
- Section 10(1)(a) is satisfied because there is an
amount of general earnings chargeable to income tax under ITEPA
2003, see
NIM13070.
- Section 10(1)(b) is satisfied because the employee
earns more than £8,500 a year, see
NIM13080.
- Section 10(1)(c) is satisfied because the expenses
are disregarded from earnings for Class 1 NICs purposes, see
NIM13090.
