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HMRC internal manual

National Insurance Manual

Class 1A National Insurance contributions: Liability for Class 1A NICs: Importance of identifying whether earnings or benefits are liable for Class 1 NICs or Class 1A NICs

As the manner in which something is provided to an employee normally determines the class of NICs payable, it is important to distinguish between

  • a payment of earnings on which Class 1 NICs are due; and
  • the provision of a benefit on which Class 1A NICs are due.An employee’s entitlement to

  • Statutory Sick Pay
  • Statutory Maternity Pay
  • Statutory Paternity Pay; and
  • Statutory Adoption Paycan be jeopardised if Class 1A NICs are incorrectly paid on earnings which properly attract Class 1 NICs. The level of student loan re-payments is also tied to the amount of Class 1 NIC earnings and incorrect identification can cause the loan re-payment to be incorrectly calculated.

See NIM13170 for guidance on how to determine whether, for NIC purposes, a benefit has been provided.