Class 1B contributions

Employers' Class 1B National Insurance contributions apply to PAYE Settlement Agreements (PSAs). They are deductible in computing an employer’s taxable business profits in the same way as employers' Class 1 and Class 1A National Insurance contributions.

Class 1B National Insurance contributions are payable on PSAs entered into for the 1999/2000 tax year and onwards and are payable at the same time as tax, using the same stationery.

Class 1B National Insurance contributions are payable at 12.8% on the total value of:

• all items covered by the PSA which would give rise to a Class 1 or Class 1A National Insurance contributions liability, and
• the tax payable by the employer under the PSA.

For further details, please see Pay Settlement Agreements.