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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 Class 1A NICs liability to arise: Employment within the benefits code

Section 10(1)(b) SSCBA 1992For a Class 1A NICs liability to arise the benefit must be provided to a director, or to an employee who is in an employment, other than an excluded employment, within the meaning of the benefits code, see EIM20005 (before 6 April 2003 – employees who fall within employments covered by Part V, Chapter II ICTA 1988, see SE20005). This includes employees earning at a rate of £8,500 or more per year and most directors.

Employers are normally required to return benefits provided to such earners on form P11Ds or substitutes.

Earners in excluded employment, i.e. not within the benefits codeClass 1A NICs are not due in respect of benefits provided to employees and certain directors in excluded employment, i.e. earning at a rate of less than £8,500 per year. However, employers are required to return certain benefits provided to earners in an excluded employment on forms P9D. See EIM20101 for more information about the meaning of excluded employment.

There is an exception to this rule where a third party provides non-cash vouchers to earners in an excluded employment. See NIM16356.