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HMRC internal manual

National Insurance Manual

From
HM Revenue & Customs
Updated
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Class 1 NICs : Earnings of employees and office holders : National Health Service employees receiving injury benefits

Under current rules certain NHS employees may be entitled to receive payments under the provisions of the NHS (Injury Benefits) Regulations 1955. These benefits were previously treated as being compensatory in nature, but from 6 April 2011 this new guidance clarifies that the different benefits (as shown below) will be liable to NICs liabilities in line with other Government and injury benefit schemes.

Temporary Injury Allowance (TIA)

These allowances are normally paid to workers who suffer a loss of earnings due to an injury, disease or condition that was wholly or mainly attributable to the duties of their employment with the NHS. The illness or injury causes a temporary absence from work and the payment ensures that the income of the individual is brought back up to 85% of pre-injury pay level. The payment ceases when the employee returns to work.

These payments are already taxed. From 6 April 2011 primary and secondary Class 1 NICs will also be payable on these earnings

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Permanent Injury Benefit (PIB)

This benefit is awarded to workers who suffer a loss of earning ability due to an illness or injury which is wholly or mainly attributable to the duties of their employment with the NHS. Such employees may, for example, have accepted a different NHS employment as a result of such illness or injury

Where the NHS employer is the same employer who is paying PIB, then that employer will account for PIB from 6 April 2011 and that benefit will then be liable to Class 1A NICs. This will apply even if the employee leaves and is re-engaged at some future point by that same NHS employer.

If the employee works for a different NHS employer and receives PIB from a former NHS employer, then the new employer is not liable to account for Class 1A on the benefit as he is not providing that to his employee

These payments are already taxed. From 6 April 2011 Class 1A NICs will also be payable on this benefit