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The correct Class of NIC applicable is sometimes debated with, or disputed by, HMRC. In general most employers would prefer to account for Class 1A or 1B, because these charges do not require accounting for employee's as well as employer's NIC, and the sums due may be paid annually after the tax year end (see E8.279E and E8.283) rather than contemporaneously through payroll. However HMRC will expect the employer to follow the correct basic principles to identify the appropriate Class of NIC due.

Much of the historical debate in this area has concerned the purchase and provision of car fuel. However the same issues might arise or be argued in other benefit in kind situations. The following represents a brief summary of how NIC is applied:

1. Ìý

   •ÌýÌýÌýÌý as one would expect, a cash payment (or something which can be used to obtain cash), see E4.401–E4.402, will attract Class 1 (payroll) NIC

2. Ìý

   •ÌýÌýÌýÌý conversely most benefits in kind will attract