NIM13002 - Class 1A NICs: Liability for Class 1A NICs: General principles of Class 1A NICs
Liability for Class 1A NICs can only arise where:
- the benefit provided is chargeable to income tax under Schedule E of the Income and Corporation Taxes Act 1988 (ICTA 1988), see NIM13021 and
- a liability for UK NICs arises, see NIM13040
- Providing these two primary conditions are satisfied, Class 1A NICs are:
- a secondary contributor’s liability only, normally an employer’s, except in limited circumstances where a benefit is provided by a third party, see NIM16350
- payable on most benefits in kind, see NIM13140
- payable for broadly the same group of employees within employments covered by Part V, Chapter II ICTA 1988 (employees earning £8500 or more and directors) but see NIM16356 for an exception to this general rule where non cash vouchers are provided by third parties
- charged at the not contracted-out, secondary (employer) Class 1 NICs percentage rate in force during the tax year in which the benefit is provided, see NIM15020
- assessed by reference to the cash equivalent of a benefit calculated for tax purposes and reported by employers on form P11D, Return of Expenses and Benefits, see NIM15002
- payable annually by the 19 July following the tax year in which the benefit is provided
- reported annually using form P11D(b), Return of Class 1A National Insurance contributions.
There is no corresponding Class 1A contribution payable by
employees and no entitlement to contributory benefits is derived
from their payment.
The assessment of Class 1A NICs follows the tax rules for
calculating the cash equivalent of a benefit. There are no separate
rules for working out the cash equivalent of any benefit for Class
1A NIC purposes but see
NIM16000 for guidance on special cases
where the amount of Class 1A NICs due may need to be adjusted or a
specific Class 1A NICs exemption exists.
For guidance on:
- calculating the cash equivalent of a particular benefit see NIM13150
- the conditions which must be satisfied for a Class 1A liability to arise see NIM13021
