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From 6 April 1999, Class 1 NICs have been payable on gains made from rights to acquire shares (most commonly in the form of share options), where that right to acquire shares is received by employees in connection with their employment, provided that the shares are readily convertible assets. Similarly, a Class 1 NIC liability arises when a post-acquisition event occurs and the employee makes a gain from those securities. However, the legislative development is complex and outside the scope of this Chapter¹.

In recognition of companies' concerns about the difficulty of accounting for NICs on future share option gains², a facility was introduced in 2000 which allowed employers (in relation only to share option gains) to either³:

1. Ìý

   •ÌýÌýÌýÌý agree with employees that the employer can recover some or all of their secondary Class 1 NIC liability from the employee, or

2. Ìý

   •ÌýÌýÌýÌý make a joint election with the employee under which the legal liability for the employer's secondary Class 1 contributions