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HMRC internal manual

National Insurance Manual

Class 1 NICs: Employment - Related Securities: Shares - Caselaw


Although there is no established National Insurance caselaw relating to shares and other securities there are a couple of notable tax cases which have an impact on NICs.

Weight v Salmon - 1935

In this case it was held that the acquisition of shares at less than market value constituted a profit from the employment.

Abbot v Philbin - 1960

The House of Lords held that a gain made on the exercise of a share option was not a profit from the employment but a gain derived from the shareholding. This meant that an income tax charge arose when the option was granted and not on the gains derived from the exercise of that option. Later tax legislation moved the income tax charge from the grant to the exercise of an option

The same principle applies for NICs in that the grant of the option is a payment of earnings. However, since 6 April 1999, the NICs position has been aligned with the income tax position - see NIM06823.