TaxPersonal TaxTax Questions & Answers

Tax Questions & Answers

Frank Haskew and Francesca Lagerberg of the ICAEW's tax faculty answer questions about Class 1A National Insurance Contributions.

Q

What are Class 1A National Insurance Contributions and who has to pay them?

A Class 1A NICs are payable by employers (not employees) on benefits in kind provided to employees. The charge is based on the cash equivalent value of the benefit as reported on the P11D. The Class 1A rate is the same as the Class I NIC rate paid by employers, that is 12.2% for 2000-01 and 11.9% for 2001-02.

Q What are they charged on?

A When they were first introduced in April 1991, Class 1A NICs were charged only in respect of cars and private fuel provided to employees. However, from 6 April 2000, they were extended to include most taxable benefits in kind.

Q When are they paid?

A They are payable annually in arrears. For example, the Class 1A liability for the tax year 2000-01 is due on 19 July 2001.

Q How are they reported?

A The form for reporting Class 1A NICs (Form P11D(b)) for 2000-01 needs to be filed by 6 July 2001. This is the first year that these forms need to include details of Class 1A NICs due on almost all benefits in kind, and not just company cars and car fuel.

Q How do I get further help?

A The Revenue produces a leaflet ‘Class 1A National Insurance Contributions on benefits in kind – an employer’s guide’ (CWG5 (2000) Issue 2). It includes a useful summary of whether benefits are liable to Class 1 or Class 1A NICs and is available on the Revenue’s website (www.inlandrevenue.gov.uk).

Employers struggling with Class 1A NICs can call the Revenue’s employers helpline on 0845 7143 143. Lines are open from 8:00am to 8:00pm, Monday to Friday, and 8:00am to 5:00pm, Saturdays and Sundays.

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