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HMRC internal manual

National Insurance Manual

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: Non-cash vouchers provided

NIM16356 explains that where

  • an employer neither arranges nor facilitates an award made by a third party, and
  • the award involves the provision of an item on which Class 1 NICs are duethe 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.

Section 10ZB of the SSCBA 1992 changes the normal Class 1 NICs liability on non-cash vouchers to Class 1A NICs liability where the employer has no involvement in the award. The third party is legally responsible for payment of the Class 1A NICs.

Non-cash vouchers provided by third parties are liable for Class 1A NICs, even if the employee is within an excluded employment, i.e. earning at a rate of less than £8,500.

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.