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HMRC internal manual

National Insurance Manual

HM Revenue & Customs
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Class 1A National Insurance contributions: Liability for Class 1A NICs: Person liable to pay Class 1A NICs: Relevant payment of earnings: General

Section 10(2) SSCBA 1992

NIM13101 explains that the person liable to pay Class 1A NICs is the person who is liable to pay secondary (employer) Class 1 NICs on the last or only ’relevant payment of earnings’ to an earner in the tax year in which the benefit is provided.

A ‘relevant payment of earnings’ is a payment of earnings on which Class 1 NICs are due and which is paid in the year in which the benefit is provided. Earnings include any remuneration or profit derived from an employment, seeNIM02010.

In the context of identifying whether a relevant payment of earnings has been made, no limit is set on the amount of those earnings. All that is required is for a secondary (employer) Class 1 NICs liability to arise.

For guidance on the relevant payment of earnings test for tax years prior to 2000/2001 see NIM17550.

Genuine cases of directors or employees failing to receive earnings of any description are rare. It is important to remember that any payment of earnings in the tax year can give rise to a Class 1 NICs liability which will, in turn, identify a secondary contributor for Class 1A NIC purposes. In addition to salary, bonuses or fees, earnings can include

  • round sum allowances, see NIM06160
  • income tax liabilities met by the employer, see NIM02370
  • an employee’s personal bills paid by the employer, see NIM02270
  • non-cash vouchers and credit/debit card use, see NIM02410 and NIM02090.