Chapter 23 Class 1A and Class 1B National Insurance

Question 1

class 1A and 1B NIC

Answer 1

Class 1A – payable by employers on the cash equivalent of taxable benefits provided to employees. There is no class 1A charge if there is no income tax liability, exempt benefits like mobile phones do not add to the class 1A NIC charge. If qualifying relocation expenses and benefits are paid for by the employer in excess of £8,000 limit the excess is chargeable to class 1A NICs. Also, if a benefit is charged to class 1 or class 1B NIC this takes priority over class 1A.
Class 1B – payable by the employer where they have entered into a PAYE settlement agreement. Class 1B is charged on the grossed-up value of the benefits included within a PSA. Class 1B NIC is charged on the employer’s rate of 13.8% on the total amount.