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HMRC internal manual

Employment Related Securities Manual

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HM Revenue & Customs
Updated
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Securities Options: deductible amounts: employer's NICs met by employee

Where an employee has entered into an agreement with the employer to pay the employer’s (secondary) NICs, or a joint NICs election under which the employer’s NICs is transferred to the employee, the amount of employer’s NICs is relievable by deduction from the amount treated as employment income under ITEPA03/S476 - see ITEPA03/S481.

It is only deductible in computing the Income Tax liability, not that for NIC.

NIC agreement

Where the employer’s NICs is transferred under an agreement, the amount of relief is the amount of employer’s NICs that the employer received from the employee on or before 5 June in the tax year following that in which the gain is realised.

NIC election

Where a joint election is entered into, the amount of relief is the NICs for which employee is liable.

Election withdrawn

If the approval of the joint election is withdrawn, the amount of relief is limited to the amount of the liability met before 5 June in the tax year following that in which the gain is realised. “Approval” means approval by HMRC under paragraph 3B of Schedule 1 to the Social Security Contributions and Benefits Act 1992.

There are separate provisions that apply where a Special Contribution under section 2(1)(a) Social Security Contributions (Share Options) Act 2001 has replaced the liability to pay Class 1 NICs.