NIM13130 – Class 1A NICs: Liability for Class 1A NICs: Benefits provided to family and household members

Benefits provided to members of the family or household of directors and employees who are in employments covered by Part V Chapter II ICTA 1988 are chargeable to Schedule E income tax on the director or employee, if the benefits are provided by reason of the employment.

Class 1A NICs are payable on these benefits provided they are taxable under Schedule E as emoluments. The family member does not need to be an employee or receive earnings from the employer to allow a Class 1A NICs liability to arise.

Guidance on family and household members is contained at SE20504 and SE20505 of the Schedule E Manual. That guidance applies equally to Class 1A NICs, including those instances where the benefit is not chargeable to income tax because the employer is an individual (for example the employee’s father) and it can be shown that the benefit was provided in the normal course of his or her domestic family or personal relationships.

Special rules apply to Class 1A NICs on cars provided to members of a director’s or employee’s family or household, see NIM16030