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HMRC internal manual

Decisions and appeals for National Insurance Contributions and Statutory Payments

Notices of decision: Wording of National Insurance contributions liability decisions: Period covered by Class 1B National Insurance contributions liability decisions

The general principles about liability decisions explained in DANSP30700 apply to Class 1B National Insurance contribution (NIC) liability decisions.

Class 1B NIC are generally payable when an employer enters into a PAYE Settlement Agreement (PSA) for tax. They are payable on the tax calculated in the PSA and

  • any earnings on which Class 1 NIC would have been payable had they not been included in a PSA,
  • any general earnings on which Class 1A NIC would have been payable had they not been included in a PSA.

See PSA3010 for further details.

Class 1B NIC are payable only by employers and payment does not provide any benefit entitlement for individuals. They have to be paid no later than the 19 October following the end of the tax year in which the items included in the PSA were provided. The period you show in the decision is the tax year covered by the PSA and for which Class 1B NIC liability is disputed.


The facts

R Ltd contacts their local tax office and enters into a PSA. After submission of earnings details they are unable to agree that one of the benefits included in the PSA would have been liable for Class 1A NIC, had they not been included in the PSA, and dispute that Class 1B NIC’s are now due. The income tax position is not in dispute.

The decision

My decision is that:

R Ltd is liable to pay Class 1B contributions in respect of benefits and expenses included in a PAYE Settlement Agreement for the period from 6 April 2007 to 5 April 2008.

The Class 1B contributions R Ltd is liable to pay are £2,529.67.

The amount R Ltd has paid is £768.11.

See DANSP26700 about raising a charge on the Strategic Accounting Framework Environment (SAFE) system.