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Employment income and National Insurance contributions (NIC)

E8.201 Employment income and NIC—overview

Class 1 contributions are most commonly payable by both an employee and their employer on cash income, with Class 1A and Class 1B contributions also payable by an employer alone in respect of employee benefits.

Much of the employment income NIC material contained historically within this Division has, for convenience, now been incorporated within other divisions of Simon's Taxes, which also deal with the tax treatment of the same items. Appropriate cross-references have also been added.

The stated long-term intention of successive governments is to merge together the separate charges of PAYE income tax and Class 1 NIC. Given that the link between the quantum of NIC paid through one's lifetime, and the value of the state pension payable, is quickly being eroded (see E8.1101–E8.1104), it is assumed the separate charges of PAYE tax and NIC will indeed gradually be brought closer together. Meantime, whilst the charges of PAYE income tax and