Answers · UK 2025/26

What is Class 1A National Insurance and who pays it?

Class 1A National Insurance is a 15% charge paid by employers on the value of most taxable benefits in kind provided to employees -- such as company cars, private medical insurance, and loans. Employees do not pay Class 1A; it is solely an employer cost reported on form P11D(b).

Last updated: 27 June 2026Last reviewed: 27 June 2026How we verify

Full answer

Class 1A National Insurance Contributions (NICs) are an employer-only liability charged at 15% on the cash equivalent value of taxable benefits in kind (BiKs) provided to employees and directors. **Who pays it?** Only employers pay Class 1A NICs. Unlike Class 1 NICs (on wages), employees have no Class 1A liability. The charge covers most non-cash benefits that do not attract Class 1 NICs through payroll. **Common benefits attracting Class 1A** - Company cars and fuel benefit - Private medical or dental insurance - Non-business-related loans above £10,000 - Employer-provided accommodation (in certain cases) - Gym memberships paid by the employer **Rate in 2026/27** Class 1A NICs are charged at 15% -- the same rate as the standard employer Class 1 NIC rate that applies to wages above the Secondary Threshold of £5,000 per year. **Worked Example** An employer provides an employee with a company car with a P11D value of £30,000 and a CO2-based benefit-in-kind percentage of 25%. 1. Cash equivalent value: £30,000 x 25% = £7,500 2. Class 1A NIC: £7,500 x 15% = **£1,125** The employer pays £1,125 in Class 1A NICs in addition to the employee's income tax liability on the same £7,500 benefit. **Reporting and payment deadline** Class 1A NICs are reported annually on form P11D(b), which must be submitted by 6 July following the tax year end. Payment is due by 19 July (22 July if paying electronically). **Payrolling benefits** If an employer opts to payroll benefits instead of submitting P11D forms, Class 1A NICs are still calculated and paid at the same time -- they cannot be collected via PAYE in real time, only reported through the end-of-year P11D(b) process (or an alternative return once HMRC updates its systems). Always confirm the current payrolling rules with HMRC guidance.