The following Employment Tax guidance note Produced by Tolley in association with Vince Ashall provides comprehensive and up to date tax information covering:
Class 1 and Class 1A are the categories of NIC that can be charged on expenses reimbursed and benefits provided to employees. These classes are mutually exclusive. A benefit cannot be subject to both Class 1 and Class 1A NIC. Three requirements must be met before Class 1A NIC is charged. These are that the benefits are:
subject to income tax under ITEPA 2003
from what is defined as an ‘employed earner’s employment’ in social security legislation, and
not already subject to Class 1 NIC
See CWG5 (2015) Class 1A National Insurance contributions on benefits in kind, page 8, paragraph 4. This technical definition seems complex, so we look in practical terms in this note at how to assess which class of NIC applies.
There are several ways of providing benefits to employees. How the provision is structured generally determines which class of NIC is due. While having the incorrect structure may not necessarily h
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