NIM02230 - Class 1 NICs : Earnings of
employees and office holders : Medical cover
-
Liability for NICs is dependent on who makes the contract with
the medical insurance provider.
- If the employer enters into a contract to
provide private medical insurance for the workforce and pays the
premiums :
- the payments are disregarded for Class 1 NICs
purposes
- the payments will be liable for Class 1A NICs. For
information regarding the general principles applying in relation
to Class 1A NICs see
NIM13000.
- If the employer enters into a contract to
provide private medical insurance for a director/employee and the
director/employee then extends that insurance to cover their family
and the employer pays the whole of the premiums :
- that part of the premium which relates to the
director/employee’s family is earnings for Class 1 NICs
purposes because the employer is simply meeting the
employee’s debt in respect of the additional premiums;
and
- the remainder (which provides insurance cover for
the director/employee) will be liable for Class 1A NICs.
- If the employee enters into a contract to
provide private medical insurance and the employer agrees to pay
the premiums, the employer is discharging the employee’s debt
and so the payments must be included in gross pay for Class 1 NICs
purposes.
See
NIM02010 for general guidance regarding
the meaning of “earnings”.
