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HMRC internal manual

National Insurance Manual

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HM Revenue & Customs
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Class 1A National Insurance contributions: Special Class 1A NICs cases: Removal benefits and expenses: Examples: Class 1A NICs due on removal benefits and expenses

Section 10(1) SSCBA 1992

NIM16270 explained when Class 1A NICs may arise on certain removal benefits and expenses. There are three examples below and commentary which explains why Class 1A NICs are due.

Example 1 – Removal benefit provided not exempt from income tax

Facts

* An employee earning £40,000 a year is required to move home due to relocation of the employer’s premises from London to Manchester.
* The employer provides the employee with new white goods for his new residence. The goods are provided to replace goods used at the former residence.
* The goods used at the former residence were suitable for use at the new residence.

Commentary

* Section 285(1)(c) of ITEPA (replacement of domestic goods provided to replace goods used at the former residence which are unsuitable for use at the use new residence) is not satisfied so the benefits are not removal benefits to which section 271 of ITEPA 2003 applies (limited exemption of removal benefits and expenses), see EIM03120. 
* The goods are general earnings chargeable to income tax under section 203 of ITEPA (see EIM21101) so section 10(1)(a) of the SSCBA 1992 (see [NIM13070](https://www.gov.uk/hmrc-internal-manuals/national-insurance-manual/nim13070)) is satisfied.
* The employee is not within an excluded employment (see section 216(1) of ITEPA 2003 and EIM20007) so is within the benefits code because the employee earns more than £8,500, so section 10(1)(b) of the SSCBA 1992 (see [NIM13080](https://www.gov.uk/hmrc-internal-manuals/national-insurance-manual/nim13080)) is satisfied. 
* The employee is provided with benefits in kind which are disregarded from earnings under paragraph 1 of Part 2 of Schedule 3 of the SSCR 2001, so section 10(1)(c) of the SSCBA (see [NIM13090](https://www.gov.uk/hmrc-internal-manuals/national-insurance-manual/nim13090)) is satisfied. 
* All the conditions in section 10 of the SSCBA 1992 are satisfied so Class 1A NICs are due.

Example 2 – Removal benefit within section 272 of ITEPA 2003 exceeds the tax exemption limit

Facts

* An employee earning £40,000 a year is required to move home due to relocation of the employer’s premises from London to Manchester.
* The employer provides the employee with new white goods and carpets for his new residence. The goods are provided to replace goods used at the former residence.
* The goods used at the former residence were unsuitable for use at the new residence.
* The cost of the white goods and carpets was £12,000. 

Commentary

* Section 285(1)(c) of ITEPA 2003 (replacement of domestic goods provided to replace goods used at the former residence which are unsuitable for use at the use new residence) is satisfied so the benefits are removal benefits to which the limited exemption in section271 of ITEPA 2003 applies, see EIM03120. 
* Section 287 of ITEPA 2003 limits the exemption to the first £8,000 of removal benefits and expenses, see EIM03103. 
* The employee incurs other expenses such as transport of belongings costs, travelling costs, etc. These when added to the value of the removal benefits will exceed the £8,000 limit. The amounts above £8,000 are general earnings chargeable to income tax under section 203 of ITEPA so section 10(1)(a) of the SSCBA 1992 is satisfied, see [NIM13070](https://www.gov.uk/hmrc-internal-manuals/national-insurance-manual/nim13070).
* The employee is within the benefits code because the employee earns well above £8,500, so section 10(1)(b) of the SSCBA 1992 is satisfied, see [NIM13080](https://www.gov.uk/hmrc-internal-manuals/national-insurance-manual/nim13080). 
* The employee is provided with benefits in kind which are disregarded from earnings under paragraph 1 of Part 2 of Schedule 3 of the SSCR 2001, so section 10(1)(c) of the SSCBA is satisfied, see [NIM13090](https://www.gov.uk/hmrc-internal-manuals/national-insurance-manual/nim13090). 
* All the conditions in section 10 of the SSCBA 1992 are satisfied so Class 1A NICs are due.

NIM16290 provides an example showing amounts exempt from NICs and amounts subject to Class 1A NICs where the tax exemption limit of £8,000 is exceeded.