NIM16270 - Class 1A National Insurance contributions: Special Class 1A NICs cases: Removal benefits and expenses: Class 1 and Class 1A NICs on removal benefits and expenses

Section 10(1) of the Social Security Contributions and Benefits Act 1992 (SSCBA 1992)

Class 1A NICs due on removal benefits

Where removal benefits are provided:

  • which are not exempt from income tax but are disregarded from earnings under the payment in kind disregard, see NIM02020; or
  • which are within section 272 of ITEPA 2003, but exceed the tax exemption limit (see EIM03138)

there will be an amount of general earnings chargeable to income tax, so section 10(1)(a) of the SSCBA 1992 is satisfied.

The general earnings chargeable to income tax are disregarded from earnings under the payment in kind disregard, so section 10(1)(c) of the SSCBA 1992 is satisfied, see NIM13090. If the employee is within the benefits code (see NIM13080 for excluded employments) all the conditions in section 10(1) of the SSCBA are satisfied so Class 1A NICs will be due. Class 1A NICs are due on the amount of general earnings chargeable to income tax. See NIM16275 for an example.

Class 1 NICs due on removal expenses

Class 1 NICs are due where removal expenses are paid, which:

  • are not exempt from income tax, and
  • are not disregarded from earnings under the payment in kind disregard, see NIM02020,

For further guidance see NIM06150.

Class 1A NICs due on removal expenses

Where removal expenses are paid, which:

  • are within section 272 of ITEPA 2003, and
  • exceed the tax exemption limit (see EIM03138),

there will be an amount of general earnings chargeable to income tax, so section 10(1)(a) of the SSCBA 1992 is satisfied.

The general earnings chargeable to income tax are disregarded from earnings under paragraph 2 of Part 8 of Schedule 3 to the Social Security (Contributions) Regulations (SSCR) 2001, so Class 1 NICs are not due. Therefore, section 10(1)(c) of the SSCBA 1992 is satisfied, see NIM13090. If the employee is within the benefits code all the conditions in section 10(1) of the SSCBA are satisfied so Class 1A NICs will be due. See NIM16275 for an example.

If the employee is within the benefits code Class 1A NICs will be due where removal expenses are:

  • not within section 272 of ITEPA 2003, and
  • they are disregarded from earnings under paragraph 2 of Part 8 of Schedule 3 to the SSCR 2001.

That is because all the conditions in section 10(1) of the SSCBA 1992 are satisfied, see NIM13021. For an example of when Class 1A NICs liability will arise in these circumstances see NIM16275.