Where the employer has neither arranged nor facilitated an award
made by a third party, the class of NICs due depends on the type of
award made. See
NIM16353 for guidance about the meaning
of “arranged” or “facilitated”.
Where the award involves the provision of an item on which
Class 1A NICs are due, section 10ZA SSCBA 92 transfers liability
for Class 1A NICs to the third party.
Where the award involves the provision of an item on which
Class 1 NICs are due, the liability to pay those Class 1 NICs
remains with the employer, even though the employer may not have
been involved. The one exception to this rule is non-cash vouchers,
see
NIM16357.
If an award by a third party, the provision of which, has
not been arranged or facilitated by the employer, is made up of
cash or cash vouchers, Class 1 NICs are due. Class 1 NICs remains
the liability of the recipient’s employer. The third party
should advise the employer of the award and its value should be
added to any other earnings received by the earner in the relevant
earnings period.
Class 1A NICs are payable by the third party if the employer did
not arrange or facilitate the provision of the benefit. The third
party is legally responsible for payment. Only those benefits which
attract a Class 1A NICs liability under the rules described in
NIM13021 are subject to these special rules. Liability on awards by
third parties which consist in the provision of items for which
Class 1 or Class 1B NICs are due, remains with the employer. For
example, where an employee’s personal bill is paid.
Where a third party discharges the employee’s tax
liability on an award which attracts a Class 1A NICs liability,
further Class 1A NICs are due on the amount of tax paid. This
additional Class 1A NICs liability is also payable by the third
party.
Where the employer arranged or facilitated an award made by a third party, see NIM16354.
