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HMRC internal manual

National Insurance Manual

NICs avoidance: employment income provided through third parties: amount of earnings

The amount which counts as employment income (under Part 7A of ITEPA 2003) is the amount treated as earnings for Class 1 NICs purposes.

If the income tax rules in Part 7A of ITEPA 2003 reduce the amount counting as employment income for income tax purposes, then there is a corresponding reduction in the amount of earnings for NICs purposes. If the income tax rules reduce the amount counting as employment income for income tax purposes to nil, then the amount of earnings for NICs purposes is also nil.

Where the relevant step that gives rise to an amount of employment income (under Part 7A of ITEPA 2003) is not a payment of a sum of money, see NIM52500.

For guidance about when Class 1 NICs liability may arise on an amount which counts as employment income under Part 7A of ITEPA 2003, see NIM52150.