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HMRC internal manual

National Insurance Manual

Class 1 NICs : Earnings of employees and office holders : Course fees and examination rewards

If an employer pays an employee for fees, books, travel, etc. for work related courses or courses which the employer requires or encourages the employee to attend, for example first aid courses, these sums are earnings. They will, however, be disregarded for NICs purposes as an expense incurred by the individual in carrying out his employment (see NIM05020 for general guidance regarding business expenses).

Employer gives the employee a bonus

Employers may give employees a ‘bonus’ in the form of a single payment for success in examinations. Such a payment will generally be earnings if:

  • the terms of employment require the employee to pass the examination for the employment to continue; or
  • it is paid because the individual is an employee and for no other reason. The principles in Hamblett v Godfrey will apply. (See EIM 00610 and 00690, previously SE00610 and SE00690).

If the payment is made as a personal gift to an individual employee it will not be earnings. See NIM02165.

Employer increases the salary following an examination success

If the employer increases the salary following an examination success the increased payments are earnings. The full amount will be liable for NICs.