Taxation (UK) · National insurance contributions for employed and self-employed persons

Class 1A NIC on Taxable Benefits Explained

Updated 11 October 2026 · Fact-checked

Class 1A NIC is a National Insurance charge paid only by the employer on most taxable benefits given to employees and directors. The rate is 15% of the cash equivalent of the benefits for the tax year. You find the taxable benefits first, remove exempt ones and those already under Class 1, then multiply by 15%.

Understand Class 1A NIC on Taxable Benefits

Class 1A NIC is an employer-only charge. The employee pays nothing extra. It applies when an employer gives an employee or director a benefit that is taxable as employment income, such as a company car, private medical insurance or a loan with a cheap interest rate.

The charge is based on the cash equivalent of the benefit. That is the same figure the employee is taxed on under income tax. So your income tax benefit workings feed straight into Class 1A. There is no earnings threshold and no band. Every pound of the taxable benefit is charged at the same rate.

The rate is 15%. This is the same percentage as the employer's Class 1 rate, but the base is different. Class 1 is charged on earnings paid through payroll. Class 1A is charged on benefits, and it is paid once a year, not through each pay period.

Some benefits do not attract Class 1A. Benefits that are exempt from income tax are outside it. Benefits that are already subject to Class 1 (for example, many vouchers and assets that can easily be turned into cash) are not charged twice. Benefits covered by a PAYE settlement agreement are dealt with under Class 1B instead, not Class 1A.

The employer pays Class 1A after the end of the tax year. It is due by 22 July following the end of the tax year if you pay electronically (19 July if you pay by post). It is based on the benefits for the whole tax year, so you do not work it out month by month.

Key rules to remember

Class 1A NIC: Class 1A NIC = cash equivalent of taxable benefits × 15%; Paid by the employer only. The 15% rate is given in the ACCA tax tables.
Car benefit: Car benefit = list price × car benefit percentage; The percentage depends on CO2 emissions or, for hybrids, electric range. Electric cars with zero emissions use 3%. A petrol car at 55 g/km uses 17%.
Car fuel benefit: Car fuel benefit = £28,200 × car benefit percentage; Only applies if the employer pays for fuel used privately. It is also subject to Class 1A.
Van benefits: Van scale charge £4,020; van fuel benefit £769; Zero-emission vans have a 0% benefit, so no Class 1A arises on them.
Due date: Due by 22 July after the tax year end (electronic payment); 19 July if paid by post; For 2026/27 benefits the due date is 22 July 2027, paid once a year.

How to solve Class 1A NIC on Taxable Benefits questions

Use this method for any question asking for Class 1A NIC or the total NIC cost of a benefits package.

1List every benefit the employee or director receives for the tax year.
2Remove benefits that are exempt from income tax. They give no Class 1A.
3Remove benefits already subject to Class 1, such as vouchers, and any covered by a PAYE settlement agreement.
4Compute the taxable cash equivalent of each remaining benefit (car, fuel, van, loan, medical insurance and so on). Apply any time apportionment or employee contributions.
5Add the cash equivalents of the remaining benefits together.
6Multiply the total by 15%. There is no threshold to deduct.
7If asked, state that the employer pays by 22 July after the tax year end, and that the employee has no Class 1A liability.

Quickest way: Total the benefits, then take 15%

When to use it: Use this when you already have the income tax benefit figures, or when the question is an objective test question asking for one number.

Take the taxable benefit figure the employee is assessed on.
Strike out anything exempt or already under Class 1.
Add up the rest in one total.
Multiply by 0.15 and round only at the end.

Common mistakes in Class 1A NIC on Taxable Benefits

Charging Class 1A on the employee as well as the employer
Students mix it up with Class 1, which has an employee charge too.
Fix: Remember that Class 1A is employer-only. State this in any written answer.
Applying the 15% to the benefit before reducing it for private use contributions or part-year availability
Students rush to the NIC step.
Fix: Finish the income tax benefit calculation first. Class 1A uses the final taxable figure.
Including exempt benefits such as work-related training in the total
Students list every item in the scenario without checking taxability.
Fix: Screen each benefit for exemption before adding it. Only taxable benefits count.
Charging Class 1A on vouchers or other benefits that are already under Class 1
The item is a taxable benefit, so students assume it falls under Class 1A.
Fix: Check whether the benefit is a payment or asset that is subject to Class 1. If so, it is not charged again.
Using the monthly or weekly payroll approach and giving a wrong due date
Class 1 is paid through monthly payroll, so students assume Class 1A is too.
Fix: Class 1A is an annual charge, due by 22 July after the tax year (19 July by post).
Deducting the employment allowance or a £5,000 threshold from the benefits
Students carry over Class 1 employer thresholds.
Fix: There is no threshold for Class 1A. Apply 15% to the full benefit total.

Worked examples

Example 1

For 2026/27, a company provides a director with a petrol car with a list price of £30,000 and CO2 emissions of 55 grams per kilometre. The company also pays for all fuel, including private use. The car was available all year and the director paid nothing towards it. Calculate the Class 1A NIC payable by the company.

Show the solution

Car benefit percentage at 55 g/km is 17%.
Car benefit = £30,000 × 17% = £5,100.
Car fuel benefit = £28,200 × 17% = £4,794.
Total taxable benefits = £5,100 + £4,794 = £9,894.
Class 1A NIC = £9,894 × 15% = £1,484.10.

Answer: Class 1A NIC is £1,484.10, paid by the company by 22 July after the tax year end (electronic payment).

Example 2

For 2026/27, an employee receives: an electric car with zero CO2 emissions and list price £40,000; private medical insurance costing the employer £1,800; shopping vouchers worth £200 which are subject to Class 1; and work-related training costing £900 which is an exempt benefit. The car was available all year with no employee contribution. Calculate the Class 1A NIC.

Show the solution

Car benefit = £40,000 × 3% = £1,200. There is no fuel benefit, as the employer does not pay for fuel.
Medical insurance benefit = £1,800, the cost to the employer.
Vouchers are already subject to Class 1, so they are excluded from Class 1A.
Training is an exempt benefit, so it is excluded.
Total benefits for Class 1A = £1,200 + £1,800 = £3,000.
Class 1A NIC = £3,000 × 15% = £450.

Answer: Class 1A NIC is £450, paid only by the employer.

Exam tips

In objective test questions, the trap is usually what to exclude: exempt benefits and benefits already under Class 1. Scan for these before you calculate.
Always show the benefit total on its own line, then the ×15% step. In a constructed response question, this earns method marks even if one benefit is wrong.
Learn the 15% rate and the 22 July (electronic) due date. Both are easy marks. The 15% rate is in the tax tables provided, but the date is not.
If a question asks who pays, answer employer only. If it asks about the employee's NIC on benefits, the answer is nil.
Do not use a threshold or the employment allowance unless the question clearly tells you to. Keep the Class 1A calculation simple.

Practice questions from National insurance contributions for employed and self-employed persons

Class 1A NIC on Taxable Benefits in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

ACCA Strategic ProfessionalClass 1 and Class 1A National Insurance Contributions

Class 1A NIC on Taxable Benefits: frequently asked questions

What is the rate of Class 1A NIC in TX-UK?

The rate is 15%. It is charged on the cash equivalent of taxable benefits for the tax year. The rate is given in the tax rates and allowances provided in the exam.

What is the difference between Class 1 and Class 1A NIC?

Class 1 is charged on earnings through payroll, and both employee and employer pay it. Class 1A is charged only on the employer, on most taxable benefits, and is paid once a year after the tax year ends.

When is Class 1A NIC due?

It is due by 22 July following the end of the tax year if you pay electronically, or 19 July if you pay by post. It is paid once a year, not through monthly payroll.

How do you calculate Class 1A NIC on a company car?

First work out the car benefit (list price × percentage) and any fuel benefit (£28,200 × the same percentage). Add them together and multiply by 15%. Reduce the benefit first if the car was available for only part of the year or the employee made a contribution.