NICs—employers' recovery from employees—general prohibition and specific exceptions
NICs—employers' recovery from employees—general prohibition and specific exceptions

The following Tax practice note provides comprehensive and up to date legal information covering:

  • NICs—employers' recovery from employees—general prohibition and specific exceptions
  • Prohibition on recovery of employer's NICs
  • Example
  • Exception to prohibition—certain employment-related securities income
  • NICs elections
  • Form of the election
  • Arrangements for meeting transferred NICs liability
  • Employer’s notification obligations
  • HMRC 2016 review of NICs election regime
  • Income tax relief for employer’s Class 1 NICs recovered from employee

There are currently seven different classes of National Insurance contributions (NICs). The type paid depends on the individual's employment status, how much they earn and whether there are any gaps in their National Insurance record. The seven classes of NICs are shown in the table below.

TypeDue from/onStatutory reference
Primary Class 1Employed earnersSections 2(1)(a), 6 of the Social Security Contributions and Benefits Act 1992 (SSCBA 1992)
Secondary Class 1Employers (and other persons paying earnings)SSCBA 1992, ss 6, 7
Class 1AEmployers: benefits in kindSSCBA 1992, ss 7, 10
Class 1BEmployers: PAYE settlement agreementsSSCBA 1992, s 10A
Class 2Self-employed earnersSSCBA 1992, ss 2(1)(b), 11
Class 3Voluntary contributionsSSCBA 1992, ss 13, 13A
Class 3AAdditional pension voluntary contributionsSSCBA 1992, s 14A
Class 4Profits of a trade etcSSCBA 1992, s 15

For current rates and thresholds applicable to NICs, see Practice Note: Key UK tax rates, thresholds and allowances.

This Practice Note explains the circumstances in which a secondary contributor may, and may not, recover employer's NICs from an earner (being an employee or director). For simplicity, this Practice Note uses the terms ‘employer’ and ‘employee’ in place of ‘secondary contributor’ and ‘and ‘earner’ respectively.

For details of when NICs charges, namely primary and secondary Class 1 NICs and Class 1A NICs, arise in the context of employment-related securities and securities options, see Practice Note: NICs implications of employment-related securities and securities

Related documents:

Popular documents