For a Class 1A NICs liability to arise the benefit must be
provided to a director, or to an employee who is in an employment,
other than an excluded employment, within the meaning of the
benefits code, see EIM20005 (before 6 April 2003 – employees
who fall within employments covered by Part V, Chapter II ICTA
1988, see SE20005). This includes employees earning at a rate of
£8,500 or more per year and most directors.
Employers are normally required to return benefits provided to such earners on form P11Ds or substitutes.
Class 1A NICs are not due in respect of benefits provided to
employees and certain directors in excluded employment, i.e.
earning at a rate of less than £8,500 per year. However,
employers are required to return certain benefits provided to
earners in an excluded employment on forms P9D. See EIM20101 for
more information about the meaning of excluded employment.
There is an exception to this rule where a third party provides non-cash vouchers to earners in an excluded employment. See NIM16356.