NIM13140 – Class 1A NICs: Liability for Class 1A NICs: Benefits liable for Class 1A NICs

Section 10, SSCBA 92

Class 1A NICs legislation does not specify which benefits in kind are liable for Class 1A NICs. Instead, it provides for any taxable emolument, or anything that tax legislation treats as an emolument, to attract a Class 1A NICs liability unless:

• the emolument already attracts either a Class 1 or Class 1B NICs liability or
• the emolument is otherwise exempt from Class 1A NICs.

The main benefits which attract a Class 1A NICs liability are charged to tax under section154 ICTA 1988 and can include:

• assets transferred to the employee, such as property and goods, unless these are readily convertible assets, see NIM04002
• assets placed at the employee’s disposal, such as the use of an aircraft or boat
• private medical insurance
• services, such as free use of a private club, or a telephone line.

Other benefits covered by the extension include:

• interest free and low interest loans – section 160 ICTA1988
• living accommodation - section145 and section 146 ICTA 1988
• vans provided for private use - section159AA ICTA 1988
• certain relocation benefits and expenses – section191A, ICTA 1988

Class 1A NICs continue to apply to:

• company cars provided for private use - section157 ICTA 1988
• car fuel provided for private use - section158 ICTA 1988

Although these are the main taxable benefits which attract a Class 1A NICs liability, the absence of a definition within Class 1A NICs legislation means that it is not possible to supply a definitive list of benefits. The potential exists for anything an employer provides to, or for, his employees to be a benefit, see NIM13170.

A list of the most commonly provided benefits which attract a Class 1A NICs liability is contained at NIM13150 but that list is by no means exhaustive.