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HMRC internal manual

National Insurance Manual

From
HM Revenue & Customs
Updated
, see all updates

Class 1A National Insurance contributions: Liability for Class 1A NICs: Table of common benefits liable for Class 1A NICs

The table below lists what are likely to be the most commonly provided benefits. The purpose of the table is to indicate whether Class 1 or Class 1A NICs are due in particular cases. The amount of Class 1A NICs due is based upon the amount of general earnings calculated under ITEPA 2003 (before 6 April 2003 – the amount of the emoluments calculated under ICTA 1988). Guidance on calculating the income tax on these benefits/payments can be found in the EIM (before 6 April 2003 – the SE Manual). The table also provides references to additional NIM guidance where special Class 1A NICs rules apply.

The table is not exhaustive but provides what are likely to be the most commonly provided benefits. Remember that individual circumstances or facts surrounding a particular benefit may influence the class of NICs due. In most cases the arrangements put in place by an employer to supply the employee with a benefit will determine whether Class 1 or Class 1A NICs are due. In some instances the ‘circumstances’ box of the table will indicate whether the contract to supply the goods or services is with the employer or the employee. See NIM13170 for the importance of this distinction for NICs.

When you use this table you should refer to the references given for the NIM and the EIM (before 6 April 2003 - the SE Manual) to ensure that you treat the payment correctly.

| Type of benefit | Circumstances of provision | Class 1 Liability | Class 1A liability | NIM references | SE and EI Manual references | || | Assets placed at the employee’s disposal by the employer | Provided for business use and private use is not significant – except motor vehicles, boats and aircraft | No | No | NIM02020 | SE21602
SE21605
SE21615
EIM21611
EIM21614
EIM21630 | | Provided for mixed business and private use | No | Yes | NIM02020 & NIM05010 | | Assets transferred to the employee but not Readily Convertible Assets | Can be turned into cash only by sale, such as furniture, kitchen appliances, property and clothes | No | Yes | NIM02020 | SE21640
EIM21640 | | Car fuel for private motoring in a provided car | Any means of supply or purchase, except round sum allowances | No | Yes | NIM16175 | SE23750
EIM23750 | | Car fuel for private motoring in a privately owned car | Supplied using cash, a company credit card, garage or agency card and the litany is used | No | Yes | NIM02020
NIM05800
NIM06051
NIM16170 | SE21640 & EIM21640 – Provision of fuel
SE16010 &
EIM16010 – Credit tokens | | Supplied using cash, a company credit card, garage or agency card and the litany not used | Yes | No | SE00520 & EIM00520 – Cash
SE16010 & EIM16010 – Credit tokens | | Supplied from employer’s own pump | No | Yes | SE21640 EIM21640 | | Car parking facilities | At or near place of work | No | No | NIM05615 | SE21685
EIM21685 | | Elsewhere – unless the parking is part of a journey which is qualifying business travel | No | Yes | | Cars provided for private use | Where cash equivalent is more than nil | No | Yes | NIM16001 | SE23001
EIM23001 | | Childcare help for children up to the age of 16, effective up to 5 April 2005 | Provided by employer, or employer contracts with the provider – excluding school fees | No | No | NIM16100 | SE21687 | | Employer reimburses the employee or provides additional salary to meet the cost of childcare | Yes | No |   | | Childcare benefits, (other than workplace nurseries – see below) for children up to the age of 16, effective from 6 April 2005 | Provided by employer, or employer contracts with the provider up to a limit of £55 per week – excluding school fees | No | No | NIM16110 | EIM21687 | | Employer reimburses the employee or provides additional salary to meet the cost of childcare | Yes | No | | Clothing or uniforms which can be worn at any time | Employer provided | No | Yes | NIM02020
NIM05010 | SE32450
SE32475
EIM32450
EIM32475 | | Employee is reimbursed cost | Yes | No | SE00520
SE32450
SE32475
EIM00520
EIM32450
EIM32475 | | Clothing (protective) or uniforms which are necessary for work – may have a logo | Any circumstances | No | No | SE32470
EIM32470 | | Computers loaned for private use | Loaned for private use (tax years up to and including 2005/06) – First £500 of cash equivalent of benefit | No | No |   | SE21697
EIM21700 | | Loaned for private use (tax years up to and including 2005/06) – Cash equivalent of benefit above £500 | No | Yes | | Loaned for private use on or after 6 April 2006 | No | Yes | EIM21699 | | Entertaining clients |   | No | No | NIM05670 | SE32570
EIM32570 | | Entertaining staff | Employer contracts | No | Yes | | Employee contracts | Yes | No | | Eye tests and or special corrective appliances provided on or after 6 April 2006 | Conditions of section 320A ITEPA 2003 satisfied | No | No | NIM02145 | EIM21765 | | Eyes tests and or special corrective appliances provided before 6 April 2006 | Employer pays for the cost of or provides eyesight tests, spectacles required solely for VDU use, or where spectacles are for general use, but include a special prescription for VDU use, a proportion of the cost relating to the special prescription. | No | No | SE21765
EIM21765 | | Food, groceries, farm produce | Employer contracts | No | Yes | NIM02020 | SE21640
EIM21640 | | Employee contracts | Yes | No | | Goods, such as TV, furniture etc., transferred to employee | Employer contracts | No | Yes | NIM02020 | SE21640
EIM21640 | | Employee contracts | Yes | No | | Holidays | Employer contracts | No | Yes | NIM02020 | SE21640
EIM21640 | | Employee contracts | Yes | No | | Living accommodation provided by employer | Exempt from income tax | No | No | NIM02020 | SE11300
EIM11300 | | Not exempt from income tax | No | Yes | | Loans, beneficial arrangements | Qualifying loans | No | No | NIM02210
NIM16670 | SE26100
EIM26100 | | Non-qualifying loans | No | Yes | | Loans, written off | At time employer decides not to seek repayment of the loan | Yes | No | | Meals provided | At canteen open to all staff or on employer’s premises and offered on reasonable scale and all employees may obtain free or subsidised meals | No | No | NIM02020 | SE21670
EIM21670 | | All other circumstances | No | Yes | | Medical check ups or health screening provided by employer | One check up/health screening per year and screening/medical check up generally available to all employees or check up available to all employees identified in previous screening as needing a check up | No | No | NIM02020 | SE21765
EIM21765 | | Medical, dental treatment or insurance to cover cost | Employer contracts | No | Yes | NIM02020
NIM02230 | SE21762
EIM21762 | | Employee contracts | Yes | No | | Outside UK where need for treatment arises while employee is working outside UK for the employer | No | No | SE21766
EIM21766 | | Mobile phone provided by employer | Mobile phones provided to an employee or any family or household member, before 6 April 2006, for private use | No | No | NIM02020 | SE21780
EIM21780 | | One mobile phone provided to an employee, on or after 6 April 2006, for private use – not provided to the employee’s family and household. | No | No | EIM21778 | | Mobile phones - cost of private calls | Employer contracts | No | Yes |   | SE32945
EIM32945 | | Employee contracts | Yes | No | | Office accommodation, supplies/services used by employees in carrying out employment (includes computers) | Private use is not significant | No | No | NIM05010 | SE21601
EIM21610 | | Personal bills of the employee |   | Yes | No | NIM02270 | SE00580
EIM00580 | | Personal Incidental expenses | Conditions for exemption satisfied | No | No | NIM06010 | SE02700
EIM02710 | | Readily Convertible Assets |   | Yes | No | NIM04007 | SE11803
EIM11900 | | Relocation expenses/benefits | Non-eligible expenses | Yes | No | NIM06110

NIM16250 SE03100          
EIM03100            
  Non-qualifying benefits and eligible expenses paid after the relevant day No Yes      
  Qualifying expenses and benefits of £8,000 or less No No      
  Qualifying expenses/benefits in excess of £8,000 No Yes      
  Scholarships awarded to students because of their parent’s employment Employer contracts No Yes   SE30000
EIM30000            
  Employee contracts Yes No      
  School fees Employer contracts No Yes NIM16105 SE21640
EIM21640            
  Employee contracts Yes No      
  Social Functions Annual parties for which conditions for tax exemption satisfied No No NIM02020 SE21690
EIM21690            
  Any other type of function No Yes      
  Sporting or recreational facilities provided by employer Conditions for tax exemption satisfied No No NIM02020 SE22850
EIM21825            
  All other circumstances No Yes      
  Subscription and fees allowed under sections 343 or 344 of ITEPA 2003 (before 6 April 2003 – section 201 ICTA 1988) Any circumstances No No NIM16150 SE32880
EIM32880            
  Subscription and fees not allowed under sections 343 or 344 of ITEPA 2003 (before 6 April 2003 – section 201 ICTA 1988) Employer contracts No Yes    
  Employee contracts Yes No      
  Staff suggestion awards Conditions of section 321 of ITEPA 2003 satisfied (before 6 April 2003 – ESC A57) No No NIM02350  
NIM16300 SE06600          
EIM06600            
  Conditions of section 321 of ITEPA 2003 not satisfied (before 6 April 2003- ESC A57) – award made up of cash and/or a benefit Yes Yes      
  Telephones - employer contracts with supplier Cost of rental where private use is more than not significant No Yes NIM06190 SE32955
EIM21615            
  Costs of calls, where private use is more than not significant No Yes      
  Cost of all private calls reimbursed by employee No No      
  Telephones - employee contracts with supplier Cost of rental Yes No    
  Cost of business calls No No      
  Cost of private calls Yes No      
  Vans, provided and made available for private use (position up to 5 April 2005) Private use is any use other than business travel No Yes SE22050  
EIM22050            
  Vans, provided and made available for private use (position from 6 April 2005) Private use is insignificant No No   EIM22700
EIM22745            
  Private use is more than insignificant No Yes      
  Van fuel for vans provided and made available for private use (position from 6 April 2000 to 5 April 2005) Fuel provided by cash, credit/debit/fuel agency card (litany not used), non-cash voucher Yes No NIM16386 SE22130
EIM22068            
  Van fuel for vans provided and made available for private use (position from 6 April 2005 to 5 April 2007) Fuel provided by cash, credit/debit/fuel agency card (litany not used), non-cash voucher Yes No NIM16387 EIM22700
  Van fuel for vans provided and made available for private use (position from 6 April 2000 to 5 April 2007) Fuel provided from employer’s pump or by credit/debit/fuel agency card (litany used) No No NIM16385 EIM22068
EIM22900            
  Van fuel for vans provided and made available for private use (position from 6 April 2007) Fuel provided by whatever means for more than ordinary commuting No Yes NIM16387  
NIM16388 EIM22700          
  Workplace Nurseries Conditions for exemption satisfied No No   SE21900
EIM21902            
  Works transport services Conditions of section 242 ITEPA 2003 (before 6 April 2003 – section 197AA ICTA 1988) satisfied No No   SE21850
EIM21850            
  Works transport services Conditions of section 242 ITEPA 2003 (before 6 April 2003 – section 197AA ICTA 1988) not satisfied No Yes