Class 1A contributionsN.I.
[F110 Class 1A contributions: benefits in kind etc.N.I.
(1)Where—
(a)for any tax year an earner is chargeable to income tax under Schedule E on an amount which for the purposes of the Income Tax Acts is or falls to be treated as an emolument received by him from any employment (“the relevant employment”),
(b)the relevant employment is both employed earner’s employment and employment to which Chapter II of Part V of the 1988 Act (employment as a director or with annual emoluments of more than £8,500) applies, and
(c)the whole or a part of the emolument falls, for the purposes of Class 1 contributions, to be left out of account in the computation of the earnings paid to or for the benefit of the earner,
a Class 1A contribution shall be payable for that tax year, in accordance with this section, in respect of that earner and so much of the emolument as falls to be so left out of account.
(2)Subject to section 10ZA below, a Class 1A contribution for any tax year shall be payable by—
(a)the person who is liable to pay the secondary Class 1 contribution relating to the last (or only) relevant payment of earnings in that tax year in relation to which there is a liability to pay such a Class 1 contribution; or
(b)if paragraph (a) above does not apply, the person who, if the emolument in respect of which the Class 1A contribution is payable were earnings in respect of which Class 1 contributions would be payable, would be liable to pay the secondary Class 1 contribution.
(3)In subsection (2) above “relevant payment of earnings” means a payment which for the purposes of Class 1 contributions is a payment of earnings made to or for the benefit of the earner in respect of the relevant employment.
(4)The amount of the Class 1A contribution in respect of any emolument shall be the Class 1A percentage of so much of it as falls to be left out of account as mentioned in subsection (1)(c) above.
(5)In subsection (4) above “the Class 1A percentage” means a [F2secondary percentage] for the tax year in question.
(6)No Class 1A contribution shall be payable for any tax year in respect of so much of any emolument as is taken for the purposes of the making of Class 1B contributions for that year to be included in a PAYE settlement agreement.
(7)For the purposes of this section—
(a)the amounts which for the purposes of the Income Tax Acts are or fall to be treated as emoluments received by an earner from any employment shall be determined (subject to paragraph (b) below) disregarding sections [F3193(4), 194(1), 195(7),] 198, 201, 201AA and 332(3) of the 1988 Act (deductions for expenses etc.) [F4and section 50(2) of the M1Finance Act 1989 (provision of security assets or services]; but
(b)where an amount which is deductible in respect of any matter under any of those sections is at least equal to the whole of any corresponding amount which (but for this paragraph) would fall by reference to that matter to be included in those emoluments, the whole of the corresponding amount shall be treated as not so included.
(8)The Treasury may by regulations—
(a)modify the effect of subsection (7) above by adding any enactment contained in the Income Tax Acts to the list of sections of the 1988 Act contained in paragraph (a) of that subsection; or
(b)make such amendments of subsection (7) above as appear to them to be necessary or expedient in consequence of any alteration of the provisions of the Income Tax Acts relating to the charge to tax under Schedule E.
(9)The Treasury may by regulations provide—
(a)for Class 1A contributions not to be payable, in prescribed circumstances, by prescribed persons or in respect of prescribed persons or emoluments;
(b)for reducing Class 1A contributions in prescribed circumstances.
(10)In this section “the 1988 Act” means the M2Income and Corporation Taxes Act 1988.]
Textual Amendments
F1S. 10 substituted (28.7.2000) by 2000 c. 19, s. 78(2)
F2Words in s. 10(5) substituted (with effect for 2003-04 and subsequent tax years) by National Insurance Contributions Act 2002 (c. 19), ss. 6, 8(2), Sch. 1 para. 21
F3Words in s. 10(7)(a) inserted (with effect in relation to tax year 2000-2001 and subsequent tax years) by S.I. 2001/965, reg. 2(2)(a)
F4Words in s. 10(7)(a) inserted (with effect in relation to tax year 2000-2001 and subsequent tax years) by S.I. 2001/965, reg. 2(2)(b)
Marginal Citations
[F510ZA Liability of third party provider of benefits in kind.N.I.
(1)This section applies, where—
(a)a Class 1A contribution is payable for any tax year in respect of the whole or any part of an emolument received by an earner;
(b)the emolument, in so far as it is one in respect of which such a contribution is payable, consists in a benefit provided for the earner or a member of his family or household;
(c)the person providing the benefit is a person other than the person (“the relevant employer”) by whom, but for this section, the Class 1A contribution would be payable in accordance with section 10(2) above; and
(d)the provision of the benefit by that other person has not been arranged or facilitated by the relevant employer.
(2)For the purposes of this Act if—
(a)the person providing the benefit pays an amount for the purpose of discharging any liability of the earner to income tax for any tax year, and
(b)the income tax in question is tax chargeable in respect of the provision of the benefit or of the making of the payment itself,
the amount of the payment shall be treated as if it were an emolument consisting in the provision of a benefit to the earner in that tax year and falling, for the purposes of Class 1 contributions, to be left out of account in the computation of the earnings paid to or for the benefit of the earner.
(3)Subject to subsection (4) below, the liability to pay any Class 1A contribution in respect of—
(a)the benefit provided to the earner, and
(b)any further benefit treated as so provided in accordance with subsection (2) above,
shall fall on the person providing the benefit, instead of on the relevant employer.
(4)Subsection (3) above applies in the case of a Class 1A contribution for the tax year beginning with 6th April 2000 only if the person providing the benefit in question gives notice in writing to the Inland Revenue on or before 6th July 2001 that he is a person who provides benefits in respect of which a liability to Class 1A contributions is capable of falling by virtue of this section on a person other than the relevant employer.
(5)The Treasury may by regulations make provision specifying the circumstances in which a person is or is not to be treated for the purposes of this Act as having arranged or facilitated the provision of any benefit.
(6)In this section references to a member of a person’s family or household shall be construed in accordance with section 168(4) of the M3Income and Corporation Taxes Act 1988.]
[F610ZB Non-cash vouchers provided by third parties.N.I.
(1)In section 10ZA above references to the provision of a benefit include references to the provision of a non-cash voucher.
(2)Where—
(a)a non-cash voucher is received by any person from employment to which Chapter II of Part V of the M4Income and Corporation Taxes Act 1988 does not apply, and
(b)the case would be one in which the conditions in section 10ZA(1)(a) to (d) above would be satisfied in relation to the provision of that voucher if that Chapter did apply to that employment,
sections 10 and 10ZA above shall have effect in relation to the provision of that voucher, and to any such payment in respect of the provision of that voucher as is mentioned in section 10ZA(2) above, as if that employment were employment to which that Chapter applied.
(3)In this section “non-cash voucher” has the same meaning as in section 141 of the M5Income and Corporation Taxes Act 1988.]