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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 1992

Class 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 [## Section 10, SSCBA 1992

Class 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](https://www.gov.uk/hmrc-internal-manuals/national-insurance-manual/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 P11D

It 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.