Class 1B contributions

From 6 April 1999 Employers' Class 1B National Insurance contributions (NICs) were introduced to align the NICs and tax treatment of items included in 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 NICs.

Class 1B NICs are payable as a fixed percentage (13.8 per cent) of the combined total value of:

• all items (including VAT) covered by the PSA that attract a Class 1 or Class 1A NICs liability
• the 'grossed-up' tax total payable by the employer under the PSA.

For further details, please see PAYE Settlement Agreements (PSAs).