NIM14301 - Class 1A National Insurance contributions: Exemptions from Class 1A NICs: Benefits covered by Extra Statutory Concessions: General

Section 10 of the Social Security Contributions and Benefits Act 1992 (SSCBA 1992)

Regulation 40(7) of the Social Security Contributions Regulations 2001 (SSCR 2001) (SI 2001 No 1004)

Liability for Class 1A NICs does not arise where a benefit is covered by an Extra Statutory Concession (ESC) published by HMRC. That is because regulation 40(7) of the SS(C)R 2001 makes provision that Class 1A NICs shall not be payable on general earnings not charged to tax by virtue of an ESC.

An ESC is a relaxation which gives taxpayers a reduction in tax liability to which they would not be entitled under the strict letter of the law. Most concessions are made to deal with what are, on the whole, minor or transitory anomalies under the legislation where a statutory remedy would be difficult or costly to introduce. Guidance on their interpretation and application is contained in the relevant sections of the EIM.

Table of ESCs

The table at NIM14110 lists benefits exempt from income tax and therefore Class 1A NICs. It includes ESCs which were incorporated into ITEPA 2003 with effect from 6 April 2003. NIM14310 lists those benefits that continue to be covered by an ESC from 6 April 2003. The table also tells you where you can find guidance about each of the ESCs. Consult that guidance to ensure that the necessary conditions attached to the ESC are satisfied.

Only where the conditions for granting an ESC are satisfied for tax purposes do we accept that no Class 1A NICs are payable.