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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: Third party benefits: Provision of benefits not arranged or facilitated by the employer: Payments or benefits provided except non- cash vouchers

Section 10ZA SSCBA 1992 Where the employer has neither arranged nor facilitated an award made by a third party, the class of NICs due depends on the type of award made. See

NIM16353 for guidance about the meaning of “arranged” or “facilitated”.

Where the award involves the provision of an item on which Class 1A NICs are due, section 10ZA SSCBA 92 transfers liability for Class 1A NICs to the third party.

Where the award involves the provision of an item on which Class 1 NICs are due, the liability to pay those Class 1 NICs remains with the employer, even though the employer may not have been involved. The one exception to this rule is non-cash vouchers, see NIM16357.

If an award by a third party, the provision of which, has not been arranged or facilitated by the employer, is made up of cash or cash vouchers, Class 1 NICs are due. Class 1 NICs remains the liability of the recipient’s employer. The third party should advise the employer of the award and its value should be added to any other earnings received by the earner in the relevant earnings period.

Third party provides benefits in kind Class 1A NICs are payable by the third party if the employer did not arrange or facilitate the provision of the benefit. The third party is legally responsible for payment. Only those benefits which attract a Class 1A NICs liability under the rules described in NIM13021 are subject to these special rules. Liability on awards by third parties which consist in the provision of items for which Class 1 or Class 1B NICs are due, remains with the employer. For example, where an employee’s personal bill is paid.

Where a third party discharges the employee’s tax liability on an award which attracts a Class 1A NICs liability, further Class 1A NICs are due on the amount of tax paid. This additional Class 1A NICs liability is also payable by the third party.

Employer arranged or facilitated provision of award by third partyWhere the employer arranged or facilitated an award made by a third party, see

NIM16354.