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HMRC internal manual

National Insurance Manual

Class 1 NICs : Earnings of employees and office holders : Profit-related pay


Profit-related pay (PRP) is that part of an employee’s pay which varies according to the profits made by the business in which they work. Half of an employee’s PRP was able to be exempt from income tax until recent changes ended the tax relief. There has, however, never been any exclusion from liability for NICs purposes.


For information relating to PRP in connection with income tax, see SE03050. Since tax relief on PRP has ended there is no equivalent to SE03050 in the EIM.