NIM02370 - Class 1 NICs : Earnings of employees and office holders : Tax and National Insurance contributions
If the employer meets the employees tax liability under a net pay arrangement NICs are due on the gross pay rather than the net pay. This applies even if the employer pays tax due on a payment which itself is disregarded for NICs purposes.
An additional liability for Class 1 NICs will arise on the payment of tax made on the employees behalf by the employer. This must be added to the figure of gross pay for the particular earnings period and NICs calculated accordingly. (See NIM02377 for examples of how to calculate grossed-up tax and see NIM08000 for guidance regarding earnings periods.)