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HMRC internal manual

National Insurance Manual

Class 1A National Insurance contributions: Liability for Class 1A NICs: Calculating the cash equivalent of a benefit : General

Section 10, SSCBA 1992Class 1A NICs are calculated by reference to the cash equivalent of a benefit determined for tax purposes, see

NIM15001. Detailed guidance on how cash equivalents are calculated is given in the Employment Income Manual (before 6 April 2003 - Schedule E manual). That guidance applies equally to Class 1A NICs.

The table at NIM13150 lists the most commonly provided benefits which attract a Class 1A NICs liability and provides cross references to the EIM and SE Manual.

Completing forms P11DIt is important that when employers complete forms P11D that they show the cash equivalent of the benefit without deducting any amount that the employee may be entitled to for business use. If the employer incorrectly deducts part or all of the deduction an employee may be entitled to, and shows the incorrect cash equivalent on form P11D, it is likely that the employer will calculate Class 1A NICs on this amount and, therefore, underpay Class 1A NICs. See

NIM13147 for an example which shows two ways that an employer might calculate and record the cash equivalent of a benefit on form P11D and the possible consequences for Class 1A NICs.