NIM15005 - Class 1A National Insurance contributions: Calculating Class 1A NICs: Reporting benefits on form P11D for Class 1A NICs purposes

Regulation 80 of the Social Security Contributions Regulations 2001 (SSCR 2001) (SI 2001 No 1004)

NIM15002 explains the importance of the P11D to the calculation of Class 1A NICs.

To assist employers to calculate Class 1A NICs liability correctly, HMRC offers guidance on where particular benefits which attract a Class 1A NICs liability should be reported on the P11D. The guidance is in leaflet CWG5 “Class 1A National Insurance contributions on benefits in kind, termination payments and sporting testimonial payments”.

Although this guidance is designed to assist employers to identify benefits on which Class 1A NICs are due, it is not prescriptive guidance.

While employers should be encouraged to report benefits in the appropriate P11D boxes, HMRC does not insist on this where to do so would upset long standing reporting arrangements adopted by employers over many years. Although the P11D has been designed to help capture information needed to calculate Class 1A NICs, employers may continue to report benefits in the manner they find suitable, providing that they are able to include all benefits subject to Class 1A NICs in their Class 1A NIC calculations. Whilst most of the common benefits, such as provided cars and beneficial loans, have readily identified sections on the P11D, other benefits are capable of being returned in more than one section (see example below).

Employers who continue to report benefits liable to Class 1A NICs in boxes that have no Class 1A NICs indicator will need to use the P11D(b) adjustment facility.

Where an employer records a benefit on which Class 1A NICs are due in a P11D box that has no Class 1A NICs indicator, see NIM15006. This explains what action the employer should take so that his Class 1A NICs liability is calculated correctly.

Example

An employer may choose to report the provision of a telephone on the P11D at

box K - Services supplied

box M – Other items

box N – Expenses payments made to, or on behalf of, the employee

box O - Payments for use of a home telephone

If the employer is providing the benefit of a telephone, reporting the cost at box K or the first line of box M, will ensure that the amount is included in the employer’s Class 1A NICs calculation. Box K and line 1 of box M have brown Class 1A indicator boxes. Reporting the benefit in box N will mean that the cost of the benefit is not included in the Class 1A calculation - box N has no brown Class 1A indicator box.