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HMRC internal manual

National Insurance Manual

Class 1A National Insurance contributions: Exemptions from Class 1A NICs: Benefits covered by Extra Statutory Concessions: General

Section 10(9) SSCBA 1992 and regulation 40(7) SS(C)R 2001Liability for Class 1A NICs does not arise where a benefit is covered by an Extra Statutory Concession (ESC) published by HMRC. That is because regulation 40(7) of the SS(C)R 2001 makes provision that Class 1A NICs shall not be payable on general earnings (before 6 April 2003 – emoluments) not charged to tax by virtue of an ESC.

An ESC is a relaxation which gives taxpayers a reduction in tax liability to which they would not be entitled under the strict letter of the law. Most concessions are made to deal with what are, on the whole, minor or transitory anomalies under the legislation where a statutory remedy would be difficult or costly to introduce. Guidance on their interpretation and application is contained in the relevant sections of the EIM (before 6 April 2003 – SE Manual).

Obsolete ESCs from 6 April 2003 Many of the ESCS that existed before ITEPA 2003 became obsolete when they were incorporated into ITEPA 2003 with effect from 6 April 2003. For example, ESCA57 in respect of staff suggestion schemes is incorporated in sections 321 and 323 of ITEPA 2003 as a specific tax exemption.

Table of ESCsThe table at

NIM14110 lists benefits exempt from income tax and therefore Class 1A NICs. It includes ESCs which were incorporated into ITEPA 2003 with effect from 6 April 2003. NIM14310 lists those benefits that continue to be covered by an ESC from 6 April 2003. The table also tells you where you can find guidance about each of the ESCs. Consult that guidance to ensure that the necessary conditions attached to the ESC are satisfied.

Only where the conditions for granting an ESC are satisfied for tax purposes do we accept that no Class 1A NICs are payable.