NIM13160 - Class 1A National Insurance contributions: Liability for Class 1A NICs: Importance of identifying whether earnings or benefits are liable for Class 1 NICs or Class 1A NICs
Sections 3 and 10 of the Social Security Contributions and 51²è¹Ý Act 1992 (SSCBA 1992)ÌýÌý
As the manner in which something is provided to an employee normally determines the class of NICs payable, it is important to distinguish between:
- a payment of earnings on which Class 1 NICs are due; and
- the provision of a benefit on which Class 1A NICs are due.
An employee’s entitlement to:
- Statutory Sick Pay
- Statutory Maternity Pay
- Statutory Paternity Pay; and
- Statutory Adoption Pay
can be jeopardised if Class 1A NICs are incorrectly paid on earnings which properly attract Class 1 NICs. The level of student loan re-payments is also tied to the amount of Class 1 NICs on earnings and incorrect identification can cause the loan re-payment to be incorrectly calculated.
See NIM13170 for guidance on how to determine whether, for NICs purposes, a benefit has been provided.
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