As Class 1A NIC is calculated on the amount of benefit taxable on an employee1. It follows that if a benefit in kind enjoys a specific tax exemption, no Class 1A NIC will be due.
However in some situations, as outlined below, it is also necessary to establish whether Class 1 NIC, rather than Class 1A, applies.
Interaction with Class 1 NIC on general earnings and exclusions from Class 1A
The default position is that Class 1A rather than Class 1 NIC will be due on most taxable benefits, with the corollary position that Class 1 (rather than Class 1A) applies to cash payments. However there are some exceptions to these general rules, ie where Class 1 NIC rather than Class 1A applies to a taxable benefit (for an example, see E4.420A where employee pecuniary liabilities are met). Therefore to avoid double counting, it is necessary the legislation to exempt a Class 1A NIC charge, where Class 1 already applies on the same income2.
It is also
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Web page updated on 17 Mar 2025 16:53