860.Currently, employees pay primary Class 1 National Insurance contributions (NICs) on all cash earnings they receive between the Lower Earnings Limit* (LEL) and the Upper Earnings Limit* (UEL). Employers pay secondary Class 1 NICs on all cash payments above the earnings threshold (equal to the Single Person’s Tax Allowance) which they pay to employees with no UEL applying. Non-cash benefits are excluded in regulations from the computation of earnings subject to Class 1. But some, such as bonds and gemstones, are brought back into a Class 1 NICs charge. Employers also pay Class 1A NICs – at a rate equivalent to the Class 1 secondary rate – on the value of car and fuel benefits which are provided to their employers for their private use. Employees pay no NICs on such benefits.
Part IV: National Insurance Contributions Commentary on Sections