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HMRC internal manual

National Insurance Manual

Class 1A National Insurance contributions: Special Class 1A NICs cases: Workers going or coming from abroad who are provided with benefits: General conditions applying to liability for NICs - the worker

An employer is only liable to pay Class 1A NICs in respect of benefits provided to a worker who is employed by him if that worker is

  • ordinarily resident or employed in the United Kingdom (Great Britain and Northern Ireland); and
  • in employed earner’s employment. However, an employer is not liable to pay Class 1A NICs in respect of benefits provided to a worker, employed by him, if the worker is exempt from NICs because he is covered by any of the modifications listed at



Employee works for ABC plc in the UK.

Employee enters into a contract of employment which is expected to last no more than five years in the USA with XYZ Ltd, a subsidiary company of ABC plc . His contract of employment with ABC plc ends immediately before his new contract of employment with XYZ Ltd starts.

The employee is subject to the USA’s social security system.

ABC plc continues to provide the employee with a car and house in the UK which some of his family members enjoy the use of.

In this example, the employee is not subject to UK NICs legislation so there will be no Class 1A NICs liability even though ABC plc continues to provide benefits.
The effect of these residence and presence conditions means that employers may be liable to pay Class 1A NICs on benefits provided to some workers but not on benefits provided to others. This is likely to occur in multi-national companies who engage overseas workers or send workers overseas.

Employers should hold confirmation of non-liability for NICs for workers for whom there is no liability. This normally takes the form of a certificate of continuing liability issued by the relevant authority in the country from which the worker has arrived.

When establishing any Class 1A NICs due, establish the dates from which liability for Class 1A NICs either arises or ceases. Most employees arriving from abroad will enter the UK scheme during a tax year. To calculate the Class 1A NICs due on benefits provided in the first tax year a pro-rata calculation is needed. A pro-rata calculation is also necessary where a worker leaves the UK scheme part way through a tax year, see NIM16500.