NIM14501 - Class 1A National Insurance contributions: Exemptions from Class 1A NICs: Benefits and payments exempt from Class 1A NICs by regulation: General

Section 10(9)(a) Social Security Contributions and Benefits Act 1992

Regulation 40 of, and Paragraph 1 of Part 2 of Schedule 3 to, the Social Security (Contributions) Regulations 2001 (SSCR 2001) (SI 2001 No 1004)

Benefits or payments exempt from both Class 1 and Class 1A NICs

The scope of the legislation which extended Class 1A NICs liability to all benefits in kind, automatically catches any general earnings, or something treated as general earnings, which is chargeable to income tax under ITEPA 2003, if there is no existing Class 1 or Class 1B liability, see NIM13090.

This means that

  • items that do not attract a Class 1 NICs liability because they have been specifically excluded from Class 1 NICs; and
  • which are, or are treated as, general earnings chargeable to income tax under ITEPA 2003

have the potential to attract a Class 1A NICs liability by default.

Benefits exempt from Class 1A NICs

An earner may have been provided with a benefit that

  • does not attract a Class 1 NICs liability because it is disregarded from earnings under paragraph 1 Part 2 of Schedule 3 to the SSCR 2001 (the payment in kind disregard), and
  • is chargeable to income tax under ITEPA 2003 on an amount of general earnings.

Some of these benefits are specifically exempted from Class 1A NICs liability.

Regulation 40 SS(C)R 2001

Any benefit or payment exempt from Class 1A NICs liability, which is not already exempt from income tax by a statutory tax exemption, is listed in regulation 40 SSCR 2001.

A list of those benefits and payments excluded from Class 1A NICs liability, is provided at NIM14510.