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HMRC internal manual

National Insurance Manual

Class 1A National Insurance contributions: Exemptions from Class 1A NICs: General

Although the conditions imposing a Class 1A NICs liability may be satisfied, see NIM13021, there are certain circumstances where the legislation specifically exempts a benefit in kind and in some cases, cash payments, from Class 1A NICs liability. These exemptions fall into six categories and apply where the benefit is

  • exempt from income tax under ITEPA 2003 (before 6 April 2003 – exempt from income tax under Schedule E) by a specific tax exemption, see NIM14101
  • benefit provided mainly for business use, private use is not significant, see NIM14105
  • included in a dispensation, see NIM14200
  • covered by an Extra-Statutory Concession, see NIM14300
  • included in a PAYE Settlement Agreement, see NIM14400
  • specifically exempted from Class 1A NICs, see NIM14500. Note that, in general, NICs legislation, including that covering Class 1A NICs, uses the term ‘exception’ or ‘disregard’. The equivalent tax term is normally ‘exemption’. In the context of Class 1A guidance all three terms have the same meaning.