How does Class 1A National Insurance on benefits in kind work in the UK?

Full answer

Class 1A NI was introduced in 1991 to ensure that employers pay National Insurance on benefits in kind as well as cash salary. It is the employer's NI contribution on taxable benefits -- employees pay Income Tax on BIKs through PAYE code adjustment, but no employee NI. **Rate:** 13.8% (same as the standard employer NI rate above the secondary threshold) -- but applied to the cash equivalent of the benefit, not earnings. **Examples of Class 1A NI in 2026/27:** | Benefit | Example value | Class 1A NI (13.8%) | |---|---|---| | Company car (petrol, 30% appropriate %) | £30,000 x 30% = £9,000 benefit | £9,000 x 13.8% = £1,242 | | Private medical insurance | £1,500 premium | £1,500 x 13.8% = £207 | | Van with private use | £3,960 flat | £3,960 x 13.8% = £546 | **What triggers Class 1A NI:** Most benefits in kind that are subject to Income Tax also attract Class 1A NI, including: company cars and fuel, private medical insurance, gym memberships, living accommodation, non-trivial gifts and vouchers, and interest-free loans above £10,000. **What does NOT attract Class 1A NI:** - Employer pension contributions (attract no employee or employer NI) - Trivial benefits under £50 (exempt from both Income Tax and NI) - Cycle-to-work schemes - Qualifying childcare provision **Reporting and payment:** - Employer completes form P11D(b) annually, summarising all Class 1A NI due - Filed by 6 July following the tax year - Paid by 19 July (postal) or 22 July (electronic) - Late payment attracts interest; errors attract penalties **Class 1A vs Class 1:** Class 1 NI applies to cash earnings (both employee and employer pay). Class 1A NI applies to BIKs (employer only). Class 1B applies to PAYE Settlement Agreement items (employer only).

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