Class 1A NICs are paid by employers in respect of most benefits in kind provided to employees such as a company car. Class 1A NICs are also due on charge on termination awards above a £30,000 threshold that have not already been subjected to Class 1 NICs deductions. There’s no employee contribution payable for Class 1A NICs.

Class 1A NICs are due in respect of most benefits provided to:

• directors and certain other persons in controlling positions;
• employees; and
• members of the family or households of the above.

Where a benefit is provided as part of salary sacrifice or other optional remuneration arrangement (OpRA), special rules apply and the Class 1A NICs are calculated as a percentage of the relevant amount.

Certain conditions must apply before Class 1A NICs are due. These conditions are that the:

• benefit must be from, or by reason of, an employee's employment and must be chargeable to Income Tax under ITEPA 2003 on an amount of general earnings as defined at Section 7(3) ITEPA 2003;
• employment must be 'employed earner’s employment' under social security law and employment as a director or an employee;
• benefit must not already attract a Class 1 NICs liability.

There is a statutory exemption for qualifying trivial benefits in kind costing £50 or less in kind. The tax-free exemption applies to small non-cash benefits like a bottle of wine, or a bouquet of flowers given occasionally to employees or any other BiK classed as 'trivial' that falls within the exemption. An annual cap of £300 is applicable for directors or other office-holders of close companies and to members of their families or households.