Section 10ZA of SSCBA 1992 introduced a change to the normal
rules for identifying who is liable to pay Class 1A NICs. The
change concerns cases where the provider of general earnings
chargeable to income tax under ITEPA 2003 (before 6 April 2003
– emoluments under Schedule E) is someone other than the
employee’s employer.
These cases are commonly referred to as ‘third party
benefits’ or ‘third party awards’.
To be considered under these special rules, anything
provided by a third party must be provided by reason of the
employee’s employment, see
NIM13060.
The rules covering benefits or awards provided by third
parties apply equally to awards made by third parties to members of
an employee’s family or household.
Most, but not all, third party awards will involve the
employee receiving benefits as part of an incentive or promotional
drive, organised by either the employer or a third party. Examples
include vouchers or benefits given to employees who achieve sales
targets or who sell particular promotional items. It is important
to remember, however, that the types of awards that can be made by
third parties are not confined to incentive or promotional
campaigns. A third party may choose to provide benefits to an
employee for a number of different reasons.
The rules for determining whether Class 1A NICs are due on
particular benefits provided by third parties are the same as for
benefits provided by employers. The only exception to this is the
provision by a third party of non-cash vouchers which, if provided
by the employee’s employer, would attract a Class 1 NICs
liability.
For guidance on the Class 1A NICs position for cars provided
by third parties in tax years up to and including the 1999/2000 tax
year see
NIM17560.
For further guidance on the Class 1A NICs position on third
party benefits see
NIM16352.
