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HMRC internal manual

National Insurance Manual

From
HM Revenue & Customs
Updated
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Class 1A National Insurance contributions: Calculating Class 1A NICs: Calculating the total amount of Class 1A NICs due in a tax year: Example

NIM15010 explains how to calculate the amount of Class 1A NICs due. The example below illustrates how employers can calculate the liability.

In the 2006/2007 tax year, an employer provides

  • 100 employees with cars available for private use, the cash equivalent of each is £6,000
  • 250 employees with private medical care, the cash equivalent of each is £300
  • 25 employees with vans available for private use, the cash equivalent of each is £500
  • 3 employees with interest free loans, the cash equivalent of each is £3,000.The employer reports each benefit on the individual employees’ P11Ds. The Class 1A NICs percentage rate for the 2006/2007 tax year is 12.8%.

The Class 1A NICs payable by the employer are calculated as follows

Number of employees Cash equivalent of each benefit (£) Total cash equivalent for all employees (£)
     
10 6000 60000
250 300 75000
25 500 12500
3 3000 9000
  Total 156,500
Class 1A NICs due 12.8% of 156,500 20,032