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HMRC internal manual

National Insurance Manual

Class 1A National Insurance contributions: Liability for Class 1A NICs: Conditions to be satisfied for liability to arise: Employed earner’s employment

Section 10(1)(b) SSCBA 1992For Class 1A NICs liability to arise the person in receipt of a benefit in kind must be in employed earner’s employment. An employed earner is defined in section 2(1)(a) of the SSCBA 1992, see the Employment Status Manual 3130.

In the majority of cases it will be clear whether the worker receiving a benefit in kind is

  • an employee, office holder or agency worker with general earnings chargeable to income tax under ITEPA 2003 (before 6 April 2003 – emoluments chargeable to tax under Schedule E); or
  • a self-employed earner, section 2(1)(b) of the SSCBA 1992. Usually, it is unnecessary to carry out enquiries about the employment status of a worker receiving benefits. Where there is any doubt detailed enquires may need to be made. Guidance on employed earner’s employment is contained in the Employment Status Manual at ESM1001.

Class 1A NICs are not payable in respect of benefits provided to self-employed earners but see NIM13120 where a self-employed earner provides benefits to an employee.

This employed earner’s employment condition also had to be satisfied for a Class 1A NICs liability to arise in the tax years 1991/1992 to 1999/2000. See NIM17500 for guidance on Class 1A NICs before 6 April 2000.