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HMRC internal manual

National Insurance Manual

From
HM Revenue & Customs
Updated
, see all updates

Class 1B NICs: liability: what does a PSA cover?

  • minor

    • long service awards which do not satisfy the conditions in section 323 ITEPA 2003 (previously ESC A22)
    • incentive awards
    • reimbursement of late night taxi fares home which do not satisfy the conditions in section 248 ITEPA 2003 (previously ESC A66)
    • incidental overnight expenses in excess of the statutory daily limit
    • present for an employee in hospital
    • staff entertainment - for example a ticket for Wimbledon
    • use of a company van
    • use of a pool car where the conditions for tax exemption are not satisfied
    • subscriptions to gyms, sports clubs, etc.
    • telephone bills
    • gift vouchers and small gifts.
  • irregular

    • relocation expenses where the amounts concerned exceed the £8,000 tax exemption threshold
    • occasional attendance at an overseas conference where not all the expenses qualify for tax relief
    • expenses of a spouse occasionally accompanying an employee abroad
    • occasional use of a holiday flat
    • one-off gifts which are not minor.

Items provided to the same employee every year are unlikely to satisfy the irregular test.

  • an expense or benefit for which it is impracticable to operate PAYE or determine a value for P9D or P11D purposes

    • free chiropody care
    • hairdressing services
    • Christmas parties and other similar entertainment provided by the employer which do not already qualify for tax relief
    • the cost of shared taxi fares home which do not satisfy the conditions in section 248 ITEPA 2003 (previously ESC A66)
    • shared cars.

The employer will be expected to show that it is impracticable to operate PAYE on a payment, or to identify how much of a shared benefit should be attributed to each employee.

The above lists are for illustration purposes only and are not exhaustive.