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HMRC internal manual

National Insurance Manual

From
HM Revenue & Customs
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NIM02082 - Class 1 NICs : Earnings of employees and office holders : Community Charge paid by employer : Personal Community Charge paid by the employer

See NIM02081 for general information regarding the Community Charge.

If an employer paid or contributed towards liability for one or more categories of the Community Charge, the payment is earnings on which NICs are due. See NIM02010 regarding the meaning of earnings.

Liability for NICs arises at the time the employer paid or contributed towards the Community Charge. See NIM01002.

The employer must add the payment to all other earnings in the regular earnings period (see NIM08000 for guidance regarding earnings periods).

Employer met liability for or contributed towards the Personal Community Charge

In view of the fact that liability for payment of the Personal Community Charge was personal to the individual, payment by the employer must be seen as the employer meeting the employee’s debt. Such a payment is earnings for the purposes of NICs and therefore Class 1 NICs are due.

Employer met, either fully or partially, an employee’s increased Personal Community Charge on moving to a higher cost housing area

There was no link between the level of the Personal Community Charge and increased housing costs. Sometimes the Personal Community Charge may have been less in increased housing cost areas. If the employer met any of the employee’s personal liability the amount is earnings on which NICs are due.

Employer paid the Personal Community Charge of an employee living in (tied) accommodation provided by the employer

Examples of such employees are pub managers, school caretakers and ministers of religion. If the employer met the payment he was meeting the employee’s own debt. Such a payment is earnings and Class 1 NICs are due.

Employer paid the Personal Community Charge of an employee’s spouse and/or members of their family who were liable to pay

Spouses were jointly and severally liable for the Personal Community Charge due for each other. The same rules applied to anyone living together as husband and wife. Treat settlement by the employer of the Personal Community Charge for the employee’s spouse and their family as earnings of the employee on which NICs are due.

If there is evidence that the employer made the payment not as an employer to an employee but in a personal capacity, for example as husband to a wife, or as a parent to a child, the payment was not earnings and no NICs were due.

Employer paid Personal Community Charge of an employee required to work at home

If an employer required an employee to work at home, the Inland Revenue might allow a reduction in tax liability on some of the cost of domestic heating and lighting. This does not apply to the Personal Community Charge. If the employer paid all or part of the charge the amount of the payment is earnings and liability for Class 1 NICs will arise in the normal way.