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HMRC internal manual

National Insurance Manual

HM Revenue & Customs
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NIM07084 - Class 1 NICs: Payments made under employment legislation - Insolvency of employer - Payments made out of the National Insurance Fund - What is and is not earnings for NICs purposes

As explained in NIM07082, the Secretary of State for Tradeand Industry can make certain specified payments out of the National Insurance Fund. Butnot all of those payments are earnings within the definition in section 3(1) of the SocialSecurity Contributions and Benefits Act 1992.

In order to decide whether a certain payment should or should not be included in the grossamount of earnings, it is necessary to establish precisely what payments are being made.The following table shows what payments are liable to NICs and which ones are not.

### Type of payment ### Liable for NICs? ### Guidance
Arrears of pay including:    
  • guarantee payment
  • time off payments
  • medical suspension payment
  • maternity suspension payment
  • protective award Yes

Yes | NIM02010

NIM07052 | | Payment in lieu of notice or for failure to give such notice | Depends on whether payment contractual or not. If it is, include in gross pay; if not, it is not liable for NICs | NIM02520 | | Holiday pay | Yes | NIM02200 | | Basic award of compensation for unfair dismissal | No | NIM02510 for general guidance on compensation | | Reimbursement of the whole or part of any fee paid by an apprentice or articled clerk | No | NIM05020 |

See NIM02010 for general information about themeaning of “earnings”.