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HMRC internal manual

National Insurance Manual

Class 1 NICs: Earnings of employees and office holders: Superannuation contributions

Tax relief on employee pension contributions

If an employer establishes a pension scheme for their employees, they can register for tax relief with HMRC.

If an employer deducts pension contributions from their employees’ pay and pay these to a registered pension scheme they may be able to use what is known as a ‘net pay arrangement’ to give their employees tax relief on their pension contributions.

If the employer can use a net pay arrangement, tax relief is due on any contributions employees make to the pension scheme (including any additional voluntary contributions).

Assessing NICs


  • an employer has a net pay arrangement or not, and
  • the pension scheme is a registered scheme or not,

NICs must be assessed on the gross earnings before deduction of any pension contributions. There is no equivalent NICs relief.

Superannuation contributions

Sometimes amounts deducted from employees’ earnings are referred to an superannuation contributions.