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Real Time Information
The following guidance applies to all employers.
Further guidance for reporting Pay As You Earn (PAYE) in real time.
1. Who should read this guide
You should read this guide if:
- you’re an employer who provides benefits and pay expenses to employees
- you provide benefits to the employees of another employer or payroll
If you’re a new employer, or are providing benefits to your employees for the first time, the following HM Revenue and Customs (HMRC) booklets will help you:
- booklet 480: Expenses and benefits - a tax guide
- booklet 490: Employee travel - A tax and NICs guide for employers
These booklets are available online from Payroll publications for employers.
We refer to the guidance given in these booklets throughout this guide.
What payrolled benefits are
For the purposes of this guidance, the term ‘payrolled’ means a benefit you’d normally report on a P11D, but you’re taxing through your payroll instead. Provided you’ve registered online before 6 April 2017, any payrolled benefits aren’t reported on a P11D. You still need to complete P11D for any employees:
- you chose to exclude from payrolling
- who received any benefits you didn’t payroll
- you payrolled a benefit for, but hadn’t registered online to tell us you were doing so
Payrolling benefits doesn’t change the National Insurance treatment.
What this guide is about
Class 1A National Insurance contributions (NICs) are payable on most benefits provided to employees.
This guide tells you what you need to know about Class 1A NICs. It explains when Class 1A NICs are due and how they’re worked out, reported and paid.
What this guide contains
Paragraphs 4 to 26 explain the general rules about Class 1A NICs.
Paragraphs 8 and 26 provide quick, step-by-step guides to working out whether Class 1A NICs are due and how they’re worked out, reported and paid.
Paragraphs 27 to 42 explain special Class 1A rules, including what happens when a benefit is provided to an employee by a third party.
Paragraphs 43 to 53 explain some of the main terms used in this guide.
Appendix 1 lists the most common taxable benefits and expenses and tells you which are liable for Class 1A NICs.
2. More information about this guide
There are legal requirements that mean employers must comply with their obligations. At the time of writing, this guide sets out HMRC’s view on how these legal requirements can be met. It will be updated annually and was last updated in December 2017.
3. Statutory references
To assist accountants, financial directors and other financial advisers, some sections of this guide include the statutory references on which this guide is based.
The statutory references are taken from the:
- Income Tax (Earnings and Pensions) Act (ITEPA) 2003
- Social Security Contributions and Benefits Act (SSCBA) 1992, as amended
- Social Security (Contributions) Regulations (SS(C)R) 2001, as amended
Part 1 - liability for Class 1A NICs
This part explains whether you’ll have to pay Class 1A NICs on expenses and benefits in kind.
There’s a quick guide to working out whether you have to pay Class 1A NICs at paragraph 8.
4. When Class 1A NICs are payable
SSCBA 92, S10(1)
You may have to pay Class 1A NICs on a benefit you provide to your employees by reason of their employment.
Where a benefit is provided as part of salary sacrifice or other optional remuneration arrangement (OpRA), special rules apply and the Class 1A NICs are calculated as a percentage of the relevant amount. Further guidance is provided in booklet booklet 480: Expenses and benefits - a tax guide.
Certain conditions must apply before Class 1A NICs are due.
These conditions are the:
- benefit must be from, or by reason of, an employee’s employment and must be chargeable to Income Tax under ITEPA 2003 on an amount of general earnings as defined at Section 7(3) ITEPA 2003
- employment must be ‘employed earner’s employment’ under social security law and employment as a director or an employee
- benefit must not already attract a Class 1 NICs liability
5. When Class 1A NICs are due for employees
SSCBA 92, S10(1)(b)
Class 1A NICs are due on benefits provided to:
- directors and certain other persons in controlling positions
- members of the families or households of the above
You can find more information on benefits provided to family members and working out an employee’s earnings in booklet 480: Expenses and benefits - a tax guide.
In the remainder of this guide, where we refer to employees this includes directors, unless we state otherwise.
6. Payment of Class 1A NICs
SSCBA 92, S10(2)
Class 1A NICs are paid by employers only.
There’s no employee contribution payable.
Legally, the person liable to pay Class 1A NICs is:
- the person who’s liable to pay employers’ Class 1 NICs on the last or only relevant payment of earnings in the tax year
- if there’s no employers’ Class 1 liability, the person who would have been liable to pay employers’ Class 1 NICs if the benefit itself had been earnings on which Class 1 NICs are due
There’s an exception to this general rule which occurs where a benefit is provided to an employee by someone other than his or her employer - usually called a third party benefit or award. Read Part 6 for information on benefits provided by third parties.
Part 2 - exemptions from Class 1A NICs
In some cases no Class 1A NICs are due. You may have to pay Class 1 NICs on some benefits and Class 1A NICs on others. But Class 1 and Class 1A NICs will never be due on the same benefit.
You must find out whether it is Class 1 or Class 1A NICs which are due on the benefits you provide.
Read Appendix 1 for benefits on which Class 1 NICs are due.
7. When Class 1A NICs aren’t due
You don’t have to pay Class 1A NICs on benefits which are:
Exempt from Income Tax
SSCBA 92, S10(1)(a)
Class 1A NICs are payable only where the benefit provided is chargeable to Income Tax under ITEPA 2003 on an amount of general earnings as defined at Section 7(3) ITEPA 2003. Where no tax is chargeable, no Class 1A NICs are due. Full details of those benefits exempt from Income Tax are included in booklet 480: Expenses and benefits - a tax guide.
Exempt from Class 1A NICs
Part 3 of the SS(C)R 2001, Regulations 38 and 40
Sometimes tax, but not Class 1A NICs, may be due on a benefit where the benefit is excluded from Class 1A NICs. Details of these special exclusions are given in Part 5.
Covered by an extra-statutory concession published by HMRC
SS(C)R 2001, R40(7)
No Class 1A NICs are payable where a benefit isn’t chargeable to tax because of an Extra-Statutory Concession published by HMRC. Read paragraph 51 for more information.
Included in a PAYE Settlement Agreement
SSCBA 92, S10(6)
No Class 1A NICs are payable on benefits included in a PAYE Settlement Agreement (PSA). Read paragraph 53 for more information.
Provided for business use but no significant private use is allowed
ITEPA 2003, S316
No Class 1A NICs are payable where you provide, on your premises, benefits to your employees to allow them to carry out their duties but there’s also some private use by the employee, but that private use isn’t significant. Also, no Class 1A NICs are payable when you provide benefits off your premises, as long as your sole purpose in providing the benefit is so the employee can carry out his or her duties.
Examples where this exemption will apply include a:
- fax machine provided for use by an employee working from home, which is occasionally used for private purposes
- phone provided to allow an employee to receive or make business calls, on which occasional private calls are permitted
This exemption doesn’t apply where the benefit provided:
- is a motor vehicle, boat or aircraft
- involves an improvement or extension to living accommodation
If this exemption doesn’t apply (for instance if the private use isn’t insignificant, or the benefit is a motor vehicle, boat, aircraft or an improvement to living accommodation) Class 1A NICs will be due and the benefit must continue to be reported on form P11D or if you payrolled the benefit, on the Full Payment Submission whatever the amount of business use.
Already liable for Class 1 NICs
SSCBA 92, S10(1)(c)
No Class 1A NICs are payable on benefits which are liable for Class 1 NICs. Read Appendix 1 for those benefits on which Class 1 NICs are due.
Exempt from Class 1 NICs
SS(C)R 2001, R40
No Class 1A NICs are payable on certain payments which are also exempt from Class 1 NICs.
- certain payments out of retirement benefits schemes
- redundancy payments
- payments of, or contributions towards, specific and distinct expenses actually incurred by an employee in carrying out the employment - for example, if you reimburse an employee for the cost of washing a uniform worn at work
Exempt as a trivial benefit
ITEPA 2003, S2323A
No Class 1A NICs are payable on a benefit for your employee if all of the following apply:
- it cost you £50 or less to provide
- it isn’t cash or a cash voucher
- it isn’t a reward for their work or performance
- it isn’t in the terms of their contract or provided under salary sacrifice
This is known as a ‘trivial benefit’. You don’t need to pay tax or National Insurance, or let HMRC know.
8. Quick guide to working out whether Class 1A NICs are due
More information is available in paragraph 4.
Read Part 6 for details of benefits awarded by third parties.
- Is the benefit from, or by reason of, the employee’s employment and chargeable to Income Tax under ITEPA 2003 on an amount of general earnings as defined at Section 7(3) ITEPA 2003?
Read paragraph 4 and paragraph 7.
If no, there are no Class 1A NICs due.
If yes, go to question 2.
- Is the employement in ‘employed earner’s employment’?
Read paragraph 4 and paragraph 5.
If no, there are no Class 1A NICs due.
If yes, go to question 3.
- Are Class 1 NICs due on the benefit?
Read paragraph 7.
If no, go to question 4.
If yes, there are no Class 1A NICs due.
- Is the benefit included in a PAYE Settlement Agreement?
Read paragraph 7.
If no, go to question 5.
If yes, there are no Class 1A NICs due.
- Is the benefit provided for business use only or available primarily for business use where the private use isn’t significant?
Read paragraph 7.
If no, go to question 6.
If yes, there are no Class 1A NICs due.
- Is the benefit excluded from Class 1A NICs?
If no, Class 1A NICs are due.
If yes, there are no Class 1A NICs due.
Part 3 - working out Class 1A NICs
This part explains how to work out Class 1A NICs. The rules described in this section should be used for all benefits.
If you provide company cars to your employees, you’ll need to read booklet 480: Expenses and benefits - a tax guide.
It also gives details of how Class 1A NICs are calculated in special or unusual cases, including shared cars and cars provided by more than one employer.
9. How to calculate Class 1A NICs
Class 1A NICs are calculated as a percentage of the cash equivalent of a benefit. The cash equivalent figure used to work out Class 1A NICs is the same figure which you report for tax purposes on form P11D Expenses and benefits (or substitute) or as a taxable amount for payrolling through RTI.
Where a benefit is provided as part of salary sacrifice or other OpRA, special rules apply and the Class 1A NICs are calculated as a percentage of the relevant amount. Further guidance is provided in Part 5 booklet 480: Expenses and benefits - a tax guide.
The rules for working out the cash equivalent of a benefit are given in booklet 480: Expenses and benefits - a tax guide, and in various optional working sheets provided with forms P11D.
So that you don’t have to work out Class 1A NICs on each cash equivalent, the total amount of Class 1A NICs payable is calculated by:
- adding together each cash equivalent figure for each benefit, for each employee
- multiplying the total figure by the Class 1A percentage rate
The percentage rate at which Class 1A NICs are worked out is the employers’ Class 1 NICs rate for the tax year in which the benefit is made available. For the tax year 2018 to 2019, the Class 1A percentage rate is 13.8%.
During the tax year 2018 to 2019, you provide health care and company cars to 25 of your employees. The Class 1A NICs percentage rate for the 2018 to 2019 tax year is 13.8%.
The cash equivalent figures reported on each employee’s P11D are £150 health care and £3,000 car benefit.
To calculate the Class 1A NICs due:
Add the total cash equivalent figures together
£150 x 25 = £3,750
£3,000 x 25 = £75,000
Total = £78,750
Multiply the figure from Step 1 by the Class 1A percentage rate
£78,750 x 13.8% = £10,867.50
Class 1A NICs due = £10,867.50
Once you’ve worked out the amount of Class 1A NICs due you may need to adjust the figure.
Read paragraph 18 for instances where this may be necessary.
10. Record keeping for Class 1A NICs purposes
If you’ve used the figures from your P11Ds and or Full Payment Submissions to calculate the Class 1A NICs due, you don’t need to keep further records.
If you’ve used substitute forms, or you used the adjustment boxes on form P11D(b), you may be asked to provide evidence about how you arrived at the figures you used. It’s important you keep supporting records, on paper or electronically, to show how you made your calculations. You must provide them on request. If you provide company cars or vans and fuel it may be to your advantage to keep detailed records of those particular benefits to calculate the amount of Class 1A NICs due.
Read booklet 480: Expenses and benefits - a tax guide.
11. How benefits provided can affect their NICs treatment
Sometimes, the way in which you provide benefits to your employees can decide whether Class 1 or Class 1A NICs are due on them. It’s important you look carefully at how you provide benefits to your employees, as this will affect what class of NICs you’re liable to pay.
If you meet your employee’s personal liability (such as paying for or reimbursing private health insurance that your employee has taken out) that amount should be treated as gross pay on which Class 1 NICs will be due.
If, on the other hand, you take out a contract with a provider to provide an employee with private health insurance, then that will normally be a benefit recorded on the employee’s P11D or taxed through payrolling and Class 1A NICs will be due.
12. Benefits provided only for business use
No Class 1A NICs will be due where a benefit is provided:
- necessarily for use by employees wholly and exclusively in the performance of their duties
- in the course of qualifying business travel
13. Benefits provided where there’s a mixed business and private use by the employee
In most cases, Class 1A NICs will be due on the full amount of a benefit that’s made available to an employee for both private and business purposes.
This means you can use the figures you record on your employees’ P11Ds or payroll to work out the amount of Class 1A NICs due, without having to find out whether your employees are entitled to claim a tax deduction after the end of the tax year.
Where an employee reimburses the full cost of any private use before the due date for payment of Class 1A NICs (read paragraph 15), no Class 1A NICs are due.
Where certain benefits are provided for business use but the employee uses the benefit for private purposes, but that private use isn’t significant, you won’t need to report this on form P11D or payroll the benefits, and no Class 1A NICs are due.
Read paragraph 7 for more information.
How to calculate Class 1A NICs where there’s mixed use
It’s an integral part of an employee’s duties of employment to be able to make and receive business calls at home. The employer agrees to provide and pay for a phone which is available for business and private use.
To determine the Class 1A liability you must first determine the amount of the benefit chargeable to tax. The phone is available for business and private use for 365 days a year and the total cost of line rental and all calls is £1,000. Business calls amount to £550, the line rental is £150 and private calls amount to £300. Unless the employee makes good the cost of all private calls and the full cost of the line rental by the due date for payment, Class 1A NICs are due on the full cost to the employer for the whole year. This is the amount of the benefit as determined for tax purposes, in this example, £1,000.
For tax purposes, the employee can claim a deduction of £550 for the business use, which reduces the taxable benefit to £450. The deduction of £550 isn’t taken into account for Class 1A NICs purposes.
However, there are also situations where an asset or service is used primarily by the business itself for business purposes and not by the employee.
The contractual responsibility for paying for the asset or service lies with the employer but the employee may derive a benefit from using part of that asset or service. In those circumstances, the full amount of the benefit provided to the employee, on which Class 1A NICs will be due, is calculated where applicable only on the part of the asset(s) or service(s) that have been used by the employee for business and private purposes. Read Example 2.
The owner of a golf club provides living accommodation for the club steward above the clubhouse.
Mains gas and electricity are supplied to the business premises which includes a block of showers and changing facilities for golf club members, the clubhouse, the pro shop, a driving range and the accommodation provided for the club steward.
One meter monitors the gas and electricity used for all buildings.
While the club steward does have the use of gas and electricity all year round in the accommodation provided for him, he clearly derives no personal benefit from the electricity and gas supplied to any of the other buildings.
To determine the Class 1A liability you must first determine the amount chargeable to tax. The amount chargeable to tax is based on the cost to the employer of providing gas and electricity to the employee for both business and private use. Where it excludes the proportion of the services provided solely for the purpose of running the business, liability for Class 1A will follow. In this example, 75% of the electricity and gas used relates solely to the running of the business so the amount chargeable to tax and on which Class 1A NICs is due is the remaining 25%. The club steward may claim that a proportion of that 25% was also related to his business use of the provided accommodation.
For tax purposes, a deduction may therefore be due. However, irrespective of any deductions allowed for tax purposes, Class 1A NICs are due on the full 25%.
This is illustrated below:
Total electricity and gas charges £5,000
Proportion relating solely to the business (75%) £3,750
Proportion relating to availability for business and private use by the employee (25%) £1,250
Full amount chargeable to tax before deductions and on which Class 1A NICs is payable £1,250
If the club steward claims there was mixed business and private use of the gas and electricity used in the provided accommodation and claims, say, a 15% deduction for business use, this is allowed for tax purposes, but isn’t taken into account for Class 1A NICs purposes.
So, where there’s mixed business and private use by the employee of a benefit, Class 1A NICs are due on the full amount chargeable to tax ignoring any deductions the employee may be able to claim for tax purposes. However, read paragraph 12 where a fully matching deduction is available.
Any part of an asset(s) or service(s) used exclusively to facilitate the employer’s business and from which the employee derives no benefit, shouldn’t be taken into account when calculating the amount of the benefit chargeable to tax. The rules for determining the amount of a benefit are explained in the Employment Income Manual (EIM21102).
Calculating Class 1A NICs - an example where there’s no mixed use
There are situations where an asset or service is bought and used primarily for business purposes but where there’s occasional private use by an employee. For example, a business buys a limousine for the purpose of chauffeuring overseas visitors to and from airports and business meetings. When the limousine is used for this purpose it isn’t available for any of the employees’ or directors’ use, either business or private.
But for 2 weeks a year the car isn’t needed for this purpose and is placed at the disposal of the managing director for private use. In these circumstances there’s no mixed business and private use by the director, because the car is exclusively available for private use but only for the 2 weeks. The amount of benefit chargeable to tax, and on which Class 1A NICs is therefore due, will be calculated based on the 2 weeks the car was available for private use only.
14. Use form P11D to help work out Class 1A NICs
Form P11D will help you to identify which benefits are liable for Class 1A NICs. These are shown in brown boxes and have a ‘1A’ indicator. Only those benefits that have this indicator box should be included in your Class 1A NICs calculation.
Those benefits which attract a Class 1 NICs liability but are recorded on the P11D for tax purposes will have no Class 1A indicator box and you shouldn’t include those benefits in your Class 1A NICs calculation.
As Class 1A NICs are worked out using information recorded on form P11D, it’s important these forms are completed correctly. This will make sure you pay the correct amount of Class 1A NICs. If you registered online before the start of the year to payroll benefits and you’ve done so, you don’t report these benefits on a P11D, but you may use the form to help you work out the correct amount of Class 1A NICs.
Shown below are the correct entries on form P11D in respect of example 1 in paragraph 13. The cost of the business calls mustn’t be deducted from the cash equivalent figure.
Section K Services supplied
Cost to the employer £1,000
Amount made good or from which tax deducted £0
Cash equivalent (Class 1A indicator box) £1,000
Shown below are the correct entries on form P11D in respect of example 2 in paragraph 13. The cost to the employer is the cost of the services made available to the employee for private and business use. If the club steward claims there was mixed business and private use of the services in the provided accommodation, this mustn’t be deducted from the cash equivalent figure.
Section K Services supplied
Cost to the employer £1,250
Amount made good or from which tax deducted £0
Cash equivalent (Class 1A indicator box) £1,250
Part 4 - reporting and paying Class 1A NICs
This part gives guidance on reporting and paying Class 1A NICs. It explains how you should report information about Class 1A NICs to us and how you should make payment.
There’s a quick guide to working out and paying Class 1A NICs at paragraph 26.
When you use payrolling to report your benefits, this is for tax purposes only not NICs. You need to report and pay Class 1A NICs separately. See paragraph 15 for details of the payment dates.
15. Key dates for reporting and paying Class 1A NICs
The 3 key dates for Class 1A NICs due are:
- 6 July - for the P11D and P11D(b), ‘Return of Class 1A NICs due’
- 19 July - for receipt of a cheque payment of Class 1A NICs through the post
- 22 July - if paying electronically, your payment of Class 1A NICs must clear into HMRC’s bank account by 22 July
When paying electronically you need to allow enough time for us to have cleared funds by 22 July following the end of the tax year. You can pay HMRC using a number of different payment methods. HMRC accepts payments made using the Faster Payments Service which clear on the same or next day. However, some electronic payment methods can take 3 bank working days or more to reach our account.
Bank working days are Monday to Friday excluding bank holidays.
If paying by post, your cheque payment must be posted early enough to reach us no later than 19 July. As postal delays are out of your and HMRC’s hands we recommend the security and certainty of electronic payments.
Paragraph 21 has more detail about how to pay.
Late payment penalties - if your Class 1A NICs payment isn’t made on time, we may charge you the following penalties:
- 5% penalty of any amount unpaid 30 days after the due date
- an additional 5% penalty on any amount still unpaid 6 months after the due date
- a further 5% penalty on any amount still unpaid 12 months after the due date
More information about late payment penalties.
16. How to report Class 1A NICs
Once you’ve worked out the amount of Class 1A NICs due you’ll need to complete and send us a form P11D(b), ‘Return of Class 1A National Insurance contributions due’, showing the total amount of Class 1A NICs due.
You must send us both the P11D and the P11D(b) declaration by 6 July following the tax year in which the benefit is provided. If you registered online to payroll all your benefits prior to the start of the tax year and have done so, you just need to send form P11D(b). If you payrolled any benefits without registering online to do so, you need to send P11Ds as well, and make a note on the P11D to show which benefits have been taxed through the payroll.
17. Using substitute forms
If you use substitute forms or lists or other methods of returning P11D information that have been agreed with us, you should identify the items subject to Class 1A NICs on your substitute returns or lists.
Where appropriate, you should:
- return form P11D(b), using the adjustment facility as necessary to arrive at your correct Class 1A NICs liability
- keep records which identify those benefits on which Class 1A NICs are due
18. Using the P11D(b) adjustment facility
You can use Section 4 on the P11D(b) form to make adjustments to the total benefits liable to Class 1A NICs.
You may need to make an adjustment if you’ve:
- used substitute forms or lists which don’t identify the items subject to Class 1A NICs
- reported a cash equivalent figure on the P11D for tax purposes which incorrectly included tax already deducted
- reported a benefit on the P11D for which a fully matching tax deduction is available (read paragraph 12 and paragraph 13)
- included a benefit figure on the P11D for employees who have no NICs liabilities (read paragraph 27)
19. Correcting paper forms P11D or P11D(b)
If you put an incorrect figure on a paper form P11D or P11D(b) before sending it in, draw a line through the incorrect figure so it can still be read then enter the correct figure.
20. Reports of amended Class 1A NICs liability
Sometimes, more information may be made available to you after you’ve calculated and paid your Class 1A NICs in July.
Where this happens you might have to recalculate the amount of Class 1A NICs due. The late information may relate to periods when a benefit was unavailable to an employee.
If you need to recalculate the Class 1A NICs due after making your original payment you must send in a revised form P11D(b) and, where appropriate, revised forms P11D.
More information on online end of year corrections to expenses and benefits reported.
21. How and when to pay Class 1A NICs
We must receive payment of Class 1A NICs by 19 July following the end of the tax year, or 22 July if payment is made electronically.
When paying electronically you must use your Accounts Office reference number as the payment reference. You must also show the correct tax year and month the payment relates to as the payment you make in July will always be for the previous tax year.
To make a payment in July 2018, for your 2017 to 2018 Class 1A NICs you’ll need to add 1713 to the end of your Accounts Office reference. By using 13 as the final 2 digits you’re letting us know this payment is intended as Class 1A NICs. For example, 123PA000123451813 with no gaps (please note, this reference is only an example and shouldn’t be used to make a payment). Your reference will be shown on the Class 1A NICs payslip which we’ll send you in April.
The last 4 digits are essential to make sure we allocate your payment to the correct year. If you don’t provide them we’ll automatically allocate your payment to the current deduction year instead. And, we’ll send you a demand for your Class 1A NICs payment.
Pay in full and on time
You can pay HMRC using a number of different payment methods, but we recommend you pay electronically as it is safe and secure and avoids postal costs and delays. HMRC accepts payments made using the Faster Payments Service which clear on the same or next day. However, some electronic payment methods can take 3 bank working days or more to reach our account. Bank working days are Monday to Friday excluding bank holidays.
To make sure you pay on time you should check with your bank or building society well in advance of making a payment to find out about the payment method you intend to use. Check the services available to you, such as any single transaction/daily value limits and cut-off times for processing payments, to avoid your payment to HMRC being delayed.
It’s your responsibility to make sure payments are made on time, whichever payment method you use. If your Class 1A NICs payment isn’t received on time, you’ll be noted as paying late which may mean you’re charged interest and a late payment penalty.
You should use your Class 1A NICs payslip if you pay at a bank or by cheque through the post. If paying by post, post your cheque payment with the completed payslip in good time, allowing at least 3 working days for your payment to reach the Accounts Office.
22. If your business ends
Tell us when:
- your business ends
- you don’t expect to employ anyone for a complete tax year, or longer
We’ll send you form P11D(b) to complete.
23. When a transfer or succession of business occurs
The old employer must complete a P11D(b) for the Class 1A NICs payable in respect of the period up until the date of transfer or succession. The new employer will be responsible for reporting and paying Class 1A NICs from the date of transfer.
24. Interest charges for late payment
If you pay late, or if an underpayment of Class 1A NICs is discovered either by you or by us, you may have to pay interest on the amount outstanding.
Statutory interest for late payment is charged immediately from 19 July, or 22 July if payment is made by an approved electronic method.
25. Late return penalties
You may be charged penalties for failing to make a return of Class 1A NICs and for fraudulently or negligently making an incorrect return.
The filing date for the return is 6 July. If we don’t receive the return by 19 July it may attract a penalty of £100 per month or part month of lateness, for every 50 or part-batch of 50 employees provided with benefits.
If the failure continues beyond 12 months there’s an additional penalty not exceeding the amount of the Class 1A NICs paid late.
An incorrect return made carelessly or deliberately attracts a penalty not exceeding the difference between the amount of Class 1A NICs shown on that return and the amount that should have been shown.
26. Quick guide to working out, reporting and paying Class 1A NICs
There’s more information in paragraphs 9 to 25.
Establish whether Class 1A NICs are due.
Read paragraphs 4 to 8.
Calculate the amount of Class 1A NICs due:
- add together the cash equivalent of each benefit liable to Class 1A NICs
- multiply the total by 13.8%
Read paragraph 9.
You now have the amount of Class 1A NICs due.
Report the Class 1A NICs due:
- complete the Class 1A NICs declaration on form P11D(b), using the amount from Step 2
- return the P11D(b) together with completed P11Ds by 6 July
Read paragraph 16.
Paying the Class 1A NICs due:
- make an electronic payment in good time to clear by 22 July
- if paying by post, post your cheque and completed Class 1A NICs payslip to the Accounts Office to arrive on or before 19 July
Read paragraph 21.
Part 5 - special cases
This part deals with uncommon situations and benefits where special rules apply.
27. Employees going or coming from abroad
SSCBA 92, S1(6)(a)
Benefits may be:
- provided to employees whilst they’re abroad
- left behind for their use once they return
- available to family members whilst they’re abroad
If an employee is working wholly overseas and isn’t resident in the UK they’ll not have a taxable employment. A form P11D won’t be required. Similarly, where an employee works wholly overseas during the overseas part of a split year, they won’t have a taxable employment for the overseas part of the year. The benefits in kind for that period won’t be taxable and won’t be reportable, but they may be if the employee is taxable in the UK for any part of the year. For employees going or coming from abroad, who are provided with benefits, 2 factors decide whether Class 1A NICs are due.
For Class 1A NICs to be due:
- the benefit must be chargeable to Income Tax under ITEPA 2003 on an amount of general earnings as defined at Section 7(3) ITEPA 2003 (even though tax may not actually be paid)
- there must be liability for employers’ Class 1 NICs for any part of the tax year in which the benefit was provided
In some cases a person’s liability for Class 1 NICs, when they are abroad, may end part way through the year.
This can happen where:
- UK social security legislation no longer applies under the terms of European Community regulations, a Reciprocal Agreement or Double Contribution Convention
- the person is working abroad in a country where the UK has no agreements and they’ve been employed there for more than 52 weeks
When a person no longer has to pay Class 1 NICs under these rules for people abroad, the liability for Class 1A NICs will also stop. If liability ends part way through the tax year, you have to pay Class 1A NICs on the taxable benefits but adjust the calculation to take account of Class 1A liability ending part way through that tax year.
To adjust the Class 1A NICs calculation for the part year:
- calculate the Class 1A NICs using the rules described in Parts 1 to 3 of this guide
- treat the benefit as being unavailable in the days when the UK National Insurance liability ended
Class 1A NICs are calculated on a pro rata basis. You should use the adjustment facility provided on form P11D(b) if you need to adjust the amount of Class 1A NICs due.
28. Company cars or vans and fuel benefit
Company cars or vans and fuel benefits are taxed under special rules contained in Part 3 Chapter 6 of ITEPA 2003. Class 1A NICs on these benefits follow the normal Class 1A NICs rules, but there are special Class 1A NICs rules for cars or vans provided in unusual circumstances.
- a car or van shared by 2 or more employees
- sharing the cost of providing a car or van between 2 employers
If you provide cars or vans in special or unusual cases, read 480: Expenses and benefits - a tax guide.
SSCBA 1992, S10
Employer provided childcare
Liability for Class 1A NICs on the provision of childcare benefits has been aligned with the tax position since 6 April 2005. For information on the tax position, read booklet 480: Expenses and benefits - a tax guide.
Broadly, employer supported childcare is exempt from NICs in line with the tax treatment under S318 and S318A - D ITEPA 2003. So long as the qualifying conditions are satisfied, NICs are only payable on the cost of the childcare which exceeds the amount which is exempt from tax.
Workplace nurseries where you provide childcare in a nursery or playscheme on your premises (or on premises you provide jointly with others that you’re wholly or partly responsible for financing and managing), won’t be liable for Class 1A NICs where that’s in line with the tax treatment.
These exemptions don’t extend to:
- school fees
- cash which you give to employees to help them meet the cost of their own childcare arrangements
- paying an employee’s childcare bills on their behalf
In these cases Class 1 NICs are due.
Childcare Voucher schemes
From 6 April 2011 changes were made to the rules about providing vouchers to employees for childcare. For those in a childcare voucher scheme from that date the amount that could be disregarded depended on the tax position of the employee. Currently the amounts that can be disregarded for NICs purposes are:
- £55 a week for basic rate taxpayers
- £28 for higher rate taxpayers
- £25 for additional rate taxpayers
It’s the responsibility of the employer to determine the tax liability of the employee before awarding vouchers so they know how much can be correctly disregarded.
Any excess of vouchers given above those values are earnings liable for Class 1 NICs.
More information about Employer Supported Childcare.
30. Fees and professional subscriptions
SSCBA 92, S10SS(C)R 2001, Regulation 40 and paragraph 11 of Part 10 of Schedule 3
Some subscriptions and fees paid to certain approved professional bodies and societies are exempt from NICs in line with the Income Tax treatment under S343 and S344 ITEPA 2003.
Subscriptions and fees not exempt from tax under S343 and S344 ITEPA 2003
NICs are due where employers meet the costs of subscriptions and fees paid to a body or society.
Class 1A NICs are payable if you contract with the body concerned to provide membership for your employees.
Class 1 NICs are payable if you reimburse the cost of membership arranged by the employees themselves.
31. Incidental overnight expenses
SSCBA 92, S10SS(C)R 2001, Paragraph 4 of Part 10 of Schedule 3
Employees who have to stay away from home overnight on business may incur additional expenses of a personal nature. Examples include newspapers, laundry and phone calls home.
There’s an exemption which provides that employers can pay these incidental expenses free of tax and NICs as long as they are within prescribed limits and certain conditions are met. Full details of the qualifying conditions are set out in booklet 480: Expenses and benefits - a tax guide.
The exemption covers all possible ways in which an employer can meet these expenses, including payment by non-cash voucher, credit card, cash payments and by way of a benefit.
Where you pay or provide an incidental expense which exceeds the prescribed limit or fails the qualifying conditions, the whole amount (not just the excess) is liable to tax and NICs under the normal rules. For the purposes of determining whether the prescribed limit is exceeded, the various elements of the incidental expense must be added together.
The NICs liability will depend upon how the incidental overnight expense is paid. Where it consists:
- wholly of cash, non-cash vouchers or credit card payment, Class 1 NICs are payable
- wholly of a benefit, Class 1A NICs are payable
- of a combination of various elements
- Class 1 NICs are payable on the cash payments, non-cash vouchers and credit card payments
- Class 1A NICs are payable on any benefit
An employee spends 4 nights away from home in the UK and receives incidental expenses totaling £32. The expenses are made up of £12 cash, an £8 non-cash voucher, and the inclusion of a laundry charge in the overall hotel bill arranged and met by the employer amounting to £12.
As the incidental overnight expenses exceed the prescribed maximum of £20 (4 nights at £5), the NICs liability is calculated as follows:
- Class 1 NICs on £20 - the total of cash and non-cash voucher elements
- Class 1A NICs on £12 - the benefit of the laundry charge
An employee spends 3 nights away from home in the UK and receives incidental expenses totaling £12. The expenses are made up of £9 cash, and a £3 newspaper charge included in the hotel bill met by the employer.
As the incidental overnight expenses don’t exceed the prescribed maximum of £15 (3 nights at £5), there’s no tax or NICs liability.
32. Relocation expenses and benefits
SSCBA 92, S10SS(C)R 2001, R40
Details of when Class 1 NICs are due on relocation expenses are in booklet CWG2: Further guide to PAYE and National Insurance contributions.
As well as any Class 1 NICs that may be due in connection with relocation expenses you pay, Class 1A NICs may be due if you:
- provide any type of relocation benefit which isn’t exempt from Income Tax
- pay any exempt expense after the relevant day
- provide a relocation package which exceeds the prescribed maximum of £8,000, whether the excess comprises benefits and or expenses
Class 1A NICs aren’t due on any exempt relocation benefit or expense which counts towards the £8,000 tax exemption limit.
Exempt benefits and expenses are listed in booklet 480: Expenses and benefits - a tax guide.
An employee is relocated to a new job in May 2018. The employer pays the following relocation expenses and benefits which are all paid before the relevant day:
- legal and estate agent’s fees £2,500
- removal costs £1,000
- travel costs for visiting the new location £500
- temporary living accommodation £3,000
- school fees for the children of the employee £3,000
- domestic goods purchased by employer to replace items unsuitable for use in the new home £2,500
- landscape gardening provided by employer £1,500
Class 1 NICs on item 5:
- school fees aren’t an exempt removal expense (£3,000)
Class 1A NICs on item 7:
- gardening services aren’t an exempt removal benefit (£1,500), Class 1A NICs are due on £1,500
- relocation expenses and benefits paid in excess of the prescribed £8,000
less items 5 and 7 as NICs are due on these items £4,500
less maximum £8,000
£1,500 Class 1A NICs due in total
33. Shared benefits
SS(C)R 2001, R36
Special rules apply when calculating Class 1A NICs for shared benefits.
A shared benefit can be made available:
- for use by 2 or more employees at the same time
- to 1 employee by reason of 2 or more employed earners’ employments with the same or different employers
If the benefit provided is a shared car, read the example in booklet 480: Expenses and benefits - a tax guide.
In all other cases, use the figure you’ve entered on the P11D or taxed through the payroll for each employee’s share of the cash equivalent of the benefit, to work out the amount of Class 1A NICs due.
34. Shares and other securities
You can find details of when Class 1 NICs are due on shares and other securities in booklet CWG2: Further guide to PAYE and National Insurance contributions. In some circumstances, however, Section 446S of ITEPA 2003 can apply where an employee acquires shares or other securities for less than the market value.
The difference between what the employee pays for the securities and the market value of the securities is treated as an interest-free loan. Income Tax may be due on the benefit from that interest-free loan. Where Income Tax is due a Class 1A NICs liability arises on the same amount that’s chargeable to Income Tax.
35. Staff suggestions
If staff suggestion awards meet the conditions set out in Section 321 ITEPA 2003, no NICs are due.
If the conditions aren’t met, the NICs liability will depend upon the nature of the award.
Where the award is a:
- cash payment or a non-cash voucher, Class 1 NICs are due
- benefit, Class 1A NICs are due
- combination of cash, non-cash voucher and benefit
- Class 1 NICs are due on the cash and the non-cash voucher
- Class 1A NICs are due on the benefit
Part 6 - third party benefits
This part provides guidance on NICs due on cash payments, vouchers and benefits provided to employees by someone other than their employer. These are normally referred to as third party awards.
You’ll need to know about these special rules if:
- you provide any type of award to individuals who are employed by someone else, or to a member of their family or household
- your employees, or members of their family or household, receive any type of award from someone other than you
‘Employee’ in the remainder of this part of the guide means ‘an employee or a member of their family or household’.
36. NICs due on third party awards
SSCBA 92, S10ZA and ZB
The NICs liability on any third party award depends on:
- the type of award
- whether as an employer, you’ve arranged or facilitated provision of the award with the third party - read paragraph 37
These rules don’t cover payments by third party customers as a reward for services given in the performance of the duties of the employment, for example, tips.
More information about running payroll.
Where a third party gives an employee a cash payment, a cash voucher or a benefit that normally attracts a Class 1 liability, that award will be liable for Class 1 NICs.
Where a third party provides an employee with a benefit that normally attracts a Class 1A liability or a non-cash voucher, that award will be liable for Class 1A NICs.
You, as an employer, are responsible for reporting the details and for paying NICs that are due where:
- you arrange or facilitate the provision of awards for your employees from a third party which is liable for Class 1A NICs
- a third party provides an award to your employees which is liable for Class 1 NICs
The third party is responsible for reporting the details of the award and for paying NICs that are due where:
- they have provided the award
- an award is liable to Class 1A NICs
- you, the employer, have not arranged or facilitated the provision of the award for your employees
Any non-cash voucher awarded to an employee by a third party which hasn’t been arranged with the employer is liable for Class 1A NICs.
More information on those benefits which are liable for Class 1 NICs is available in booklet CWG2: Further guide to PAYE and National Insurance contributions.
37. What does arranged or facilitated mean
If you, as an employer, play some active part in providing the award this will normally constitute you having arranged or facilitated the award. This may involve you asking the third party to make the award, sharing or underwriting the cost of the award or otherwise helping to provide the award.
You won’t be regarded as arranging or facilitating the award where you’re asked by the third party to give them a list of employees for the third party to provide awards. This may happen where third parties run incentive campaigns and they make awards to your employees.
38. Third party awards liable for Class 1 NICs
Where a third party provides an employee with a cash payment, a cash voucher or a benefit that normally attracts a Class 1 liability, that award will be liable for Class 1 NICs. Where Class 1 NICs are due, you the employer, and not the third party, are responsible for paying the NICs due.
More information on those benefits which are liable for Class 1 NICs is available in booklet CWG2: Further guide to PAYE and National Insurance contributions.
39. Third party awards liable for Class 1A NICs
Where a third party:
- provides an employee with a benefit or a non-cash voucher
- you, as the employer, haven’t arranged or facilitated the provision of the award for your employees
that award will be liable for Class 1A NICs.
Where Class 1A NICs are due, the third party is responsible for paying the NICs that are due.
40. Awards not liable for NICs
Some third party benefits, such as small gifts and general goodwill entertaining, are exempt from tax and NICs.
More information on those benefits exempt from tax and NICs are contained in booklet CWG2: Further guide to PAYE and National Insurance contributions.
41. Paying tax on behalf of an employee
SSCBA 92, S10ZA(2)
Where a third party is liable to pay Class 1A NICs on an award made to an employee and pays an employee’s tax on that award, the third party is liable for Class 1A NICs on the amount of tax he or she pays on behalf of the employee.
The third party should:
- tell you
- contact HM Revenue and Customs Incentive Award Unit at the address in paragraph 42
Where a third party pays the employee’s tax on an award for which you’re liable to pay either:
- Class 1 NICs
- Class 1A NICs because you, as the employer, arranged or facilitated the provision of the award you have to pay Class 1 NICs on the amount of tax paid by the third party
42. Reporting and paying Class 1A NICs on third party awards
If the third party has previously contacted our Incentive Award Unit about reporting and paying Class 1A NICs, the unit will automatically send them an end of year pack containing the end of year return and a payslip to pay Class 1A NICs and any tax due.
If they don’t already have a Taxed Award Scheme they should contact the Incentive Award Unit at the address below. The unit will provide details of the scheme:
National Insurance Contributions and Employer Office
HM Revenue and Customs
Telephone: 03000 200 3200
For 2017 to 2018 the end of year return should be filed by 6 July 2018.
Payment of Class 1A NICs and any tax due must be made to the HMRC Accounts Office by 19 July or 22 July if payment is made by an approved electronic method.
Part 7 - decisions and appeals against Class 1A NICs
If we don’t agree with you on a Class 1A NICs issue we’ll explain why and offer you a review. If you still think our decision is wrong you’ll then have a further 30 days to either:
- accept the offer of review
- notify the appeal to the independent tribunal, who’ll arrange for it to be heard
Reviews are completed by officers not previously involved in the decision. If you opt for a review but disagree with the review conclusion you’ll have a further 30 days in which to appeal to the tribunal.
More information about decisions and appeals - what to do if you disagree.
Part 8 - terms used in this guide
This part explains some of the main terms used in this guide.
43. Business use
The expression ‘business use by the employee’ means necessary use by the employee wholly and exclusively in the performance of the employee’s duties or, as the context requires, in qualifying business travel of the employee: read booklet 490: Employee travel - A tax and NICs guide for employers.
The term ‘child’ as used in this guide means a child not exceeding the age of 16 for whom the employee has parental responsibility.
ITEPA 2003 S67(1) and (2)
The term ‘director’ includes all company directors and any person, other than a person who’s merely a professional adviser (for example, a solicitor who gives advice) in accordance with whose instructions the directors are accustomed to act.
It also includes the members of a company whose affairs are managed by those members themselves and a member of a committee which manages an unincorporated association.
46. Director’s earnings
SSCBA 92, S10(1)(a) and (b), ITEPA 2003, S216(2) and (3)
Even if a director receives no earnings in the relevant tax year, a Class 1A NICs liability will still arise on any benefit provided to the director if the:
- benefit is chargeable to tax under ITEPA 2003 on an amount of general earnings as defined at Section 7(3) ITEPA 2003
- employment is ‘employed earner’s employment’
47. Directors and employees with no earnings
SSCBA 92, S10(2)(b)
Where a director or employee is provided with a benefit but no other earnings, Class 1A NICs are payable by the person who would have been liable to pay employer Class 1 NICs had the benefit been earnings on which Class 1 NICs are due.
48. Reserved for later use
49. Employees and employed earner
SSCBA 92, S2(1)(a)
The term ‘employee’ as used in this guide means an employed earner and includes:
- all directors
The term ‘employed earner’ used in this guide means a person who’s gainfully employed in the UK, either under a contract of service, or in an office (including elective office) with general earnings chargeable to Income Tax under ITEPA 2003.
‘Employee director’ means a director who has no material interest in the company. Information about what is meant by material interest at Employment Income Manual EIM20212 or telephone the Employer Helpline.
50. Reserved for later use
51. Extra-statutory concessions
Extra-statutory concessions are minor relaxations in the law which ordinarily deal with minor or transitory anomalies where a statutory remedy would be difficult or costly to introduce.
52. Family or household
The term ‘family or household’ covers the director’s or employee’s:
- spouse or civil partner
- children and their spouses or civil partners
- servants, dependants and guests
53. PAYE Settlement Agreements
A PSA is an agreement between you and HMRC under which you agree to pay the tax due on certain payments and benefits which you give to your employees.
PSAs normally apply to certain payments and benefits which are:
- given on an irregular basis
- provided in circumstances where it’s impracticable to apply PAYE or report benefits on form P11D, or to apportion the benefits shared by a number of employees
Where you enter into a PSA, Class 1B NICs will be payable by you on the total value of the:
- payments and benefits covered by the PSA which would normally give rise to a Class 1 NICs or Class 1A NICs liability
- tax payable by you under the PSA
More information on the types of benefits that can be included in a PSA and how you can apply for one are included in booklet CWG2: Further guide to PAYE and National Insurance contributions.
Appendix 1 - taxable benefits and expenses liable for Class 1A NICs
The chart on the following pages shows you whether Class 1 or Class 1A NICs are due on the most common types of expenses and benefits that can be made to your employees, and describes how they should be reflected on form P11D in ordinary circumstances.
You should read any note which a chart entry refers you to. These are listed at the end of the chart.
The chart isn’t comprehensive and has no legal force. It gives guidance only.
Some entries will refer you to more detailed guidance elsewhere. This may be because special conditions apply to that type of expense or benefit.
National Insurance treatment of common expenses and benefits
(Any notes mentioned are listed at the end of the table.)
If the chart doesn’t show the type of payment you’re making, or you’re not sure whether a payment attracts a Class 1 or a Class 1A NICs liability, phone the Employer Helpline on Telephone: 0300 200 3200.
More guidance about NICs on expense payments is in booklet CWG2: Further guide to PAYE and National Insurance contributions.
Optional remuneration arrangements
Benefits provided under OpRA aren’t covered by existing exemptions except in limited circumstances. Where this is the case Class 1 or Class 1A NICs are due as appropriate.
There are a number of exceptions to this where the exemptions continue to apply when the benefit is provided under OpRA so no NICs are due. These are where the benefit is:
- childcare vouchers, the provision of a workplace nursery and directly contacted employer provided childcare
|Type of expense or benefit provided||Circumstances||Class 1 NICs due include in gross pay||Class 1A NICs due||Enter on P11D at Section|
|Assets placed at the employee’s disposal||provided for business use, and private use isn’t significant - read paragraph 13||No||No||L note 1|
|provided for mixed business and private use||No||Yes||L|
|Assets transferred to the employee but not Readily Convertible Assets||can be turned into cash only by sale, such as furniture, kitchen appliances, property and clothes||No||Yes||A|
|Car fuel for private motoring in a company car||any means of supply or purchase - read booklet 480: Expenses and benefits - a tax guide for exceptions||No||Yes||F|
|Car/van fuel for private motoring in a privately-owned car/van||supplied using a company credit card, garage account or agency card and the conditions described in booklet CWG2: Further guide to PAYE and National Insurance contributions apply||No note 2||Yes||M|
|from your own fuel pump||No||Yes||M|
|any other circumstances||Yes||No||E or M|
|Car parking facilities, including motorcycles||at or near place of work as long as not provided under OpRA||No||No||-|
|elsewhere - unless the parking is part of a journey which is qualifying business travel||No||Yes||K, L or M|
|Car parking fees paid for or reimbursed to employee||at or near place of work as long as not provided under OpRA||No||No||-|
|for business related journeys||No||No||N|
|in all other circumstances||Yes||No||N|
|Cars made available for private use||read booklet 480: Expenses and benefits - a tax guide||No||Yes||F|
|Childcare help (doesn’t include vouchers - read separate entry below) provided by employer for children up to age 16 (excluding school fees - read separate entry on school fees)||your contract with the provider: variable up to £55 per week (£243 per month) where the qualifying conditions are met - read paragraph 29||No||No||-|
|all values in excess of £55 per week (£243 per month) where the qualifying conditions are met||No||Yes||M|
|any amount not meeting the conditions||No||Yes||M|
|Childcare help provided by employer for children up to age 16||you provide a nursery at the workplace (or in a facility managed and financed by you)||No||No||-|
|you reimburse the employee or provide additional salary to meet the cost of childcare||Yes||No||-|
|Christmas boxes||in cash||Yes||No||-|
|in goods||No||Yes||A, M|
|Clothing or uniforms which can be worn at anytime||provided by you, read booklet CWG2: Further guide to PAYE and National Insurance contributions||No||Yes||A, M|
|employee contracts see note 4||Yes||No||B, M|
|Clothing (protective) or uniforms may have a logo which are necessary for work||all circumstances||No||No||-|
|Council Tax||employee provided with accommodation which is within one of the categories where the value doesn’t have to be included for tax purposes on form P11D, read booklet CWG2: Further guide to PAYE and National Insurance contributions||No||No||-|
|all other circumstances, including where provided under OpRA||Yes||No||B|
|Credit cards, charge cards, employee uses your card to purchase||goods or services bought on your behalf and the conditions described in booklet CWG2: Further guide to PAYE and National Insurance contributions apply||No||No note 2||-|
|items for the personal use of the employee||Yes||No||C|
|items relating to specific and distinct business expenses actually incurred by the employee||No||No||C|
|Employee’s liability insurance||read booklet CWG2: Further guide to PAYE and National Insurance contributions for conditions||No||No||-|
|Entertaining clients expenses/allowances||all circumstances||No||No||N|
|Entertaining staff expenses/allowances||employer contracts see note 5||No||Yes||K, L or M|
|employee contracts see note 4||Yes||No||N|
|Expenses and benefits covered by an exemption unless provided under OpRA||No||No||-|
|Expenses not covered by an exemption||specific and distinct business expenses included in the payment||No||No||note 6|
|any profit element in the payment||Yes||No||-|
|Eyecare test or corrective appliance (for example, glasses or contact lenses)||employer makes available generally to employees for whom tests and appliances are necessary under regulations made under the Health and Safety at Work Act 1974 and so on||No||No||-|
|Eyecare voucher to obtain test or corrective appliance (for example, glasses or contact lenses)||employer makes available generally to employees for whom tests and appliances are necessary under regulations made under the Health and Safety at Work Act 1974 and so on||No||No||-|
|Food, groceries, farm produce||employer contracts see note 5||No||Yes||A|
|employee contracts see note 4||Yes||No||B|
|Goods, such as TV, furniture and so on, transferred to employee||employer contracts see note 5||No||Yes||A|
|employee contracts see note 4||Yes||No||B|
|Holidays||employer contracts see note 5||No||Yes||A, K, L or M|
|employee contracts see note 4||Yes||No||B|
|Incidental overnight expenses||read paragraph 31 and booklet 480: Expenses and benefits - a tax guide for special conditions||No||No||-|
|Income Tax paid||but not deducted from employee||Yes||No||M|
|on notional payments not borne by employee within 90 days of the end of the tax year||Yes||No||B|
|Insurance premiums for pensions, annuities and so on, on the employee’s death or retirement. Read CWG2: Further guide to PAYE and National Insurance contributions for exceptions||employee contracts see note 4||Yes||No||B|
|Living accommodation provided by you||read booklet CWG2: Further guide to PAYE and National Insurance contributions for special conditions and not under OpRA||No||No||-|
|in all other circumstances and where provided under OpRA||No||Yes||D|
|Loans, beneficial arrangements||qualifying loans||No||No||-|
|Loans written off||at time you decide not to seek repayment||Yes||No||M|
|Long service award||conditions of S323 ITEPA 2003 met||No||No||-|
|above conditions not fully met or provided under OpRA||For the treatment applicable to NICs, read the instructions at paragraph 35 ‘Staff suggestions’, which apply similarly for long service awards|
|Meal vouchers||vouchers redeemable for meals only (all values)||Yes||No||C|
|Meals provided by you||at canteen open to your staff generally or on your business premises on a reasonable scale and all employees may obtain free or subsidised meals, as long as the meals aren’t provided in connection with salary sacrifice or flexible rumuneration arrangements||No||No||-|
|in all other circumstances||No||Yes||M|
|Medical, dental and so on, treatment or insurance to cover such treatment||employer contracts see note 5||No||Yes||I|
|employee contracts see note 4||Yes||No||B|
|outside the UK where the need for treatment arises while the employee is outside the UK working for you||No||No||-|
|Mobile phones provided by you||employer contracts see note 7||No||No||-|
|Mobile phones costs of private calls||employer contracts see note 5||No||No||-|
|employee contracts see note 4||Yes||No||B, M or N|
|Mobile phone vouchers provided by you||for use by employee to obtain one mobile phone for private use and not under OpRA||No||No||-|
|Office accommodation, supplies or services used by employee in doing their work and not under OpRA||No||No||-|
|Personal bills of the employee paid by you||employee contracts see note 4||Yes||No||B|
|Phones You are the subscriber||cost of rental, unless private use isn’t significant||No||Yes||K or M|
|cost of calls, unless private use isn’t significant||No||Yes||K|
|cost of all private calls is reimbursed by the employee||No||No||K, L or M|
|Phones Your employee is the subscriber, and you meet the costs of calls and or rental||phones used exclusively for business||No||No||B or N|
|phones used exclusively for private use see note 4||Yes||No||B or N|
|phone used for both business and private purposes||Rental - Yes on the full amount of the rental||No||B or N|
|Calls - Yes on the full amount. Business calls, supported by evidence, can be excluded||No||B or N|
|Readily Convertible Assets (RCA), securities and or remuneration provided in a noncash form, for example, shares share options and commodities||read paragraph 34 and CWG2: Further guide to PAYE and National Insurance contributions for detailed information||Yes||No, but read paragraph 34 for detailed information||-|
|Relocation expenses or benefits||expenses which aren’t exempt see note 8||Yes||No||N|
|benefits which aren’t exempt and exempt expenses paid after the relevant day see note 9||No||Yes||M|
|exempt expenses or benefits of £8,000 or less and not under OpRA see note 9||No||No||-|
|exempt expenses or benefits in excess of £8,000 see note 9||No||Yes||J|
|Retirement benefit schemes, either registered schemes or employer financed schemes||payments you make into such schemes||No||No||-|
|Round sum allowances||specific and distinct business expense identified||No||No||See note 10|
|profit element||Yes||No||See note 10|
|Scholarships awarded to students because of their parent’s employment||employer contracts see note 5||No||Yes||M|
|employee contracts see note 4||Yes||No||M|
|School fees||employer contracts see note 5||No||Yes||M|
|employee contracts see note 4||Yes||No||M|
|Securities or an interest in securities||read RCA||-||-||-|
|Shares and share options (not RCA)||No||No||-|
|Social functions||conditions of S264 ITEPA 2003 are satisfied||No||No||-|
|all other types of function||No||Yes||M|
|Sporting or recreational facilities provided by you, for example, fishing, horse racing||conditions of S261 ITEPA 2003 are satisfied and not under OpRA||No||No||-|
|all other circumstances||No||Yes||K|
|Subscriptions, professional and fees which are allowable tax deductions under S343 and S344 ITEPA 2003 - read paragraph 30||all other circumstances||No||No||-|
|Subscriptions, professional and fees which aren’t allowable tax deductions under S343 and S344 ITEPA 2003||employer contracts see note 5||No||Yes||M|
|employee contracts see note 4||Yes||No||M|
|Suggestion schemes awards to employees||conditions of S321 ITEPA 2003 met - read paragraph 35||No||No||-|
|above conditions not fully met||Read paragraph 35|
|Third party benefits or payments||read paragraphs 36 to 42|
|Training payments for course fees, books and so on||training is work-related or encouraged or required by you in connection with the employment||No||No||-|
|all other circumstances and employer contracts see note 5||No||Yes||M|
|all other circumstances and employee contracts see note 4||Yes||No||M|
|Vans available for commuting and other private use||other private use is more than insignificant - read booklet 480: Expenses and benefits - a tax guide||No||Yes||G|
|Van fuel provided for use in vans available for commuting and other private use||all means of supply. Other private use is more than insignificant. Read booklet 480: Expenses and benefits - a tax guide||No||Yes see note 11||G|
|Vouchers||read booklet CWG2: Further guide to PAYE and National Insurance contributions for exceptions||Yes||No||C|
Where assets (apart from vehicles, boats, aircraft and certain improvements or extensions to living accommodation) and services are made available to employees to use for work on your premises or elsewhere, and there’s only a small amount of incidental private use, no Class 1A NICs will be due.
Where an employee purchases goods or services including car fuel on your behalf, and you transfer ownership of these to the employee, Class 1A NICs will be due.
Enter at the section shown unless you registered online before the start of the tax year and have been payrolling the benefit. If you didn’t register online but you’ve taxed it through the payroll, you need to report the benefit on a P11D and write on or mark up the P11D to show which benefits have been payrolled.
Contract is between the employee and the provider. The employer pays the provider or reimburses the employee. Payments to the provider should be returned on the P11D as shown. Reimbursements to the employee are subject to PAYE and don’t need to be returned on the P11D. These payments are simply meeting the employees debt and are therefore liable for Class 1 NICs.
Contract is between you, the employer, and the provider of the benefit.
Specific and distinct business expenses may feature in a number of payments you make to employees and should only be recorded in the appropriate P11D section where not covered by an exemption.
There’s no limit to the number of mobile phones that may be provided NICs-free solely for business use and on which private use isn’t significant. Only one mobile phone per employee may be provided NICs-free for private use. No mobile phone may be provided NICs-free to a member of an employee’s family or household. Read Employment Income Manual EIM21778.
Expenses which aren’t exempt are any expenses not included in the list of booklet 480: Expenses and benefits - a tax guide. You’ll need to return on the P11D any amounts your employee should have paid, but you (the employer) paid instead.
Details of what constitutes exempt expenses and benefits are described in booklet 480: Expenses and benefits - a tax guide.
Round sum allowances may feature in a number of payments you make to employees and should be recorded in the appropriate P11D section.
Class 1A NICs aren’t due and don’t need to be reported on the P11D if the van is:
- available to the employee for business travel and commuting
- not used for any other private purpose except to an insignificant extent
- available to the employee mainly for use for the employee’s business travel
Appendix 2 - useful forms and guidance issued by HMRC
- 480: Expenses and benefits – a tax guide
- 490: Employee travel – a tax and National Insurance contributions guide
- PAYE: end-of-year expenses and benefits (P11D)
- PAYE: end-of-year expenses and benefits (P11D(b))
Help and guidance
You can get help and guidance from the following sources.
For help with your PAYE payroll.
For wider interactive business help.
Webinars are a way of learning about your payroll, such as ‘Getting payroll information right’. This webinar covers the most common errors employees make when submitting information to HMRC. It shows you how to provide accurate data and avoid common payroll mistakes.
For more information about employing people.
Any page printed from the online version of this help book is uncontrolled and may not be the latest version. We recommend you always check you’re referring to the latest online version.
For information and help using our Online Services.
For more help, contact the Online Services Helpdesk by:
- Telephone: 0300 200 3600
- Textphone: 0300 200 3603
Basic PAYE tools
The Basic PAYE Tools is software you download onto your computer. It’ll help you run your payroll throughout the year. It’s designed for employers who have 9 or fewer employees, and you can use it to calculate payroll deductions and report payroll information online in real time.
More information about the Basic PAYE Tools and HMRC recognised software.
If you have:
- been an employer for less than 3 years, Telephone: 0300 200 3211
- been an employer for 3 years or more, Telephone: 0300 200 3200
- a hearing or speech impairment, Textphone: 0300 200 3212
Tell us your employer PAYE and Accounts Office references when you contact us.
You’ll find them on correspondence HMRC have sent to you.
Employer helpbooks and forms
Help books and forms are available to download, read Payroll publications for employers.
Yr laith Gymraeg
I lawrlwytho ffurflenni a llyfrynnau cymorth Cymraeg, ewch i www.gov.uk/cymraeg sgroliwch i lawr i’r pennawd ‘Treth’ a dilynwch y cysylltiadau ‘Ffurflenni Cyllid a Thollau EM (CThEM)’ ac ‘Arweiniad a thaflenni gwybodaeth CThEM’.
Forms and guidance in Braille, large print and audio
For details of employer forms and guidance in Braille, large print or audio, phone the Employer Orderline on Telephone: 0300 123 1074 and ask to speak to the Customer Service Team.
Education services from the Digital Delivery Team
View our video clips.
Follow us on Twitter @HMRCbusiness.
Employer Bulletin online
Employer bulletins contain information and news for employers. We publish these 6 times a year. Read HM Revenue and Customs Employer Bulletin
Employer email alerts
We strongly recommend you register to receive employer emails to prompt and direct you to:
- each new edition or news about the Basic PAYE Tools
- the Employer Bulletin
- important new information
If you use PAYE Online
Remember to keep your email address up to date. If you change your email address, don’t forget to update PAYE Online to make sure you continue to receive email alerts when we’ve issued tax codes and generic notifications.
HM Revenue and Customs
If you have a query about your PAYE scheme:
- phone the Employer Helpline on Telephone: 0300 200 3500
- write to:
HM Revenue and Customs
PT Operations North East England
Tell us your employer PAYE and Accounts Office references when you contact us. You’ll find them on correspondence HMRC have sent to you.
Your rights and obligations
Your Charter explains what you can expect from us and what we can expect from you.