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HMRC internal manual

National Insurance Manual

Class 1 NICs : Earnings of employees and office holders : Council Tax or water or sewerage charges: Employer pays all or part of the Council Tax, water or sewerage charges for an employee in provided accommodation

Regulation 25 and paragraph 10 of Part VIII of Schedule 3 to the Social Security(Contributions) Regulations 2001

Since 30 November 1993, if an employer pays all or part of the Council Tax or water orsewerage charges for an employee who lives in provided accommodation, for example a farmworker, the payment is excluded from the calculation of earnings for NICs purposes.

This was initially provided for by regulation 19(1)(r) of the Social Security(Contributions) Regulations 1979 but is now covered by regulation 25 and paragraph 10 ofPart VIII of Schedule 3 to the Social Security (Contributions) Regulations 2001.

The provision was introduced to mirror the tax treatment of such payments under section314 of ITEPA 2003 (previously section 145(4) ICTA 1988) which excludes from tax payments of council tax, water and sewerage charges if they are paid in respect of accommodationwhich falls within the exceptions covered by sections 99 and 100 of the Income Tax(Earnings and Pensions) Act 2003 - see EIM 00585 and EIM11332 (SE11332 for guidance regarding section 145(4) ICTA 1988).