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HMRC internal manual

National Insurance Manual

Class 1A National Insurance contributions: Calculating Class 1A NICs: Partial tax deductions: General

Section 10(7)(a) and 10(7A) SSCBA 92 (before 6 April 2003 – section 10(7) SSCBA 1992)No reduction in the amount of Class 1A NICs due can be made where, for tax purposes, a partial deduction is allowed under any of the following sections of ITEPA 2003. The equivalent ICTA 1988 reference is show in brackets.

  • Section 336 (section 198) – Deductions for expenses.
  • Sections 343 and 344 (section 201) – Deductions for professional membership fees and annual subscriptions.
  • Section 346 (section 201AA) – Deductions for employee liabilities.
  • Section 351 (section 332(3)) – Expenses of ministers of religion.
  • Section 365 (section 156(8)) – Deductions where a benefit is provided.
  • Section 376 (section 193(4)) – Foreign accommodation and subsistence costs and expenses.
  • Section 370 (section 194(1)) – Travel costs and expenses where duties performed abroad.
  • Section 373 (section 195(7)) – Non-domiciled employees’ travel costs and expenses where duties performed in UK.
  • Section 377 (sections 50 and 52 of the Finance Act 1989) – Costs and expenses in respect of personal security assets and services.Partial deductions are most common where a benefit is provided for both business and private use. See EIM21613 (before 6 April 2003 – see SE21601) where the private use of a benefit is not significant.

Unless the available deduction fully matches the cash equivalent of the benefit, Class 1A NICs are due on the full amount of the cash equivalent, seeNIM15500.

For examples showing the effect of deductions on Class 1A NICs liability see NIM15560.

Disputed liabilityWhere an employer refuses to accept that Class 1A NICs are due on the full cash equivalent of the benefit issue a decision under section 8 of the Social Security Contributions (Transfer of Functions, Etc.) Act 1999.