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HMRC internal manual

National Insurance Manual

Class 1B NICs: liability: calculation: why are class 1B nics due on the tax paid under a PSA?

With the introduction of PSAs from 6 April 1996, liability for payment of the tax moved to the employer and in paying it they were discharging their own liability. The payment therefore ceased to attract a liability for NICs from 6 April 1996. When Class 1B NICs were introduced with effect from 6 April 1999, liability for NICs on the tax paid by the employer was reintroduced in order to maintain the level of NICs to ensure that the introduction of Class 1B NICs had a neutral effect on income to the National Insurance Fund.