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

Class 1A NIC on Benefits in Kind Explained

Updated 11 October 2026 · Fact-checked

Class 1A NIC is an employer-only national insurance charge, at 15%, on the taxable value of most benefits in kind given to employees and directors. You work out the cash equivalent of each benefit, add them up, and multiply by 15%. It is normally paid by 22 July after the tax year ends.

Understand Class 1A NIC on Benefits in Kind

Employees pay income tax on benefits in kind, such as a company car or private medical cover. The employer also has a national insurance cost on those benefits. That cost is Class 1A NIC.

Class 1A is paid only by the employer. The employee pays no NIC on the benefit. It is charged on the cash equivalent of the benefit, which is the same figure that is taxed on the employee as employment income and reported on form P11D. So you do not value anything twice. You take the benefit figures you have already computed.

Class 1A is charged on the benefits that are reported after the end of the tax year. It is not charged on benefits that are exempt from income tax. Benefits already subject to Class 1 NIC through the payroll are also outside it. Benefits covered by a PAYE settlement agreement are charged under Class 1B instead, not Class 1A.

The rate is 15%, the same as the employer Class 1 rate above the secondary threshold. There is no threshold, and no part of the benefit is exempt from the charge. The employer's Class 1A cost is a deductible expense when computing taxable profits.

The tax is due after the end of the tax year, not through the monthly payroll. The usual payment date is 22 July if you pay electronically, and 19 July if you pay by cheque. This is why students search for both dates. The P11D forms are due by 6 July.

Key rules to remember

Class 1A NIC: Class 1A NIC = 15% × total cash equivalent of taxable benefits; Employer only. Rate of 15% is given in the tax tables ACCA provides. No threshold applies.
Company car benefit: Car benefit = list price × appropriate percentage × (months available ÷ 12); The appropriate percentage depends on CO2 emissions and, for hybrids, electric range. Use the tax tables. Zero-emission cars are 3%.
Car fuel benefit: Fuel benefit = £28,200 × the same appropriate percentage as the car; Only applies if the employer provides fuel for private journeys. Time-apportion if available for part of the year.
Company van benefits: Van scale charge £4,020; van fuel benefit £769; Zero-emission vans have a 0% benefit. Both amounts are in the tax tables.
Payment dates: 22 July after the tax year (electronic); 19 July (cheque); P11D forms are due by 6 July. Interest on late payment runs at the rate on underpaid tax, which is 8.50% in the tax tables.

How to solve Class 1A NIC on Benefits in Kind questions

Use this method for any question asking for the employer's NIC cost on benefits.

1List every benefit given to each employee or director. Note which are taxable and which are exempt.
2Remove benefits that are exempt from income tax, benefits already within Class 1 through the payroll, and benefits covered by a PAYE settlement agreement.
3Compute the cash equivalent of each remaining benefit using the income tax rules, time-apportioning for part-year availability and deducting any employee contributions allowed.
4Add the cash equivalents together across all employees. Class 1A is on the total, not per employee.
5Multiply the total by 15%.
6State the payment date, which is 22 July after the tax year ends if paid electronically, and say the employee pays no NIC.
7If asked, say the Class 1A cost is deductible in the employer's profit computation and comment on cash flow.

Quickest way: Total the P11D benefits, then multiply by 15%

When to use it: When the question gives you the benefit values, or gives the data needed to compute them, and only asks for the Class 1A cost.

Underline each taxable benefit in the scenario.
Write the cash equivalent of each in a single column.
Add the column and multiply by 15%.
Round to the nearest £ at the end, as the supplementary instructions allow.
Write one sentence on the 22 July date.

Common mistakes in Class 1A NIC on Benefits in Kind

Charging Class 1A on the employee as well.
Students mix it up with Class 1 primary contributions, which employees do pay.
Fix: Class 1A is employer-only. Say so clearly, and put no NIC charge in the employee's computation.
Applying a threshold or a 2% or 8% rate.
The Class 1 table has several bands, and students apply them to Class 1A by habit.
Fix: Class 1A has one rate, 15%, with no threshold. Use the total benefit figure.
Including exempt benefits or benefits already in Class 1.
Students total everything in the scenario without checking which are taxable and not payrolled.
Fix: Screen each benefit first. Only taxable benefits not subject to Class 1 or a PSA go into the Class 1A base.
Using the full-year car benefit for a car available for part of the year.
The time apportionment is forgotten when the NIC step comes last.
Fix: Compute each benefit properly first, including months of availability and employee contributions. Then apply 15%.
Giving the wrong payment date or paying through monthly PAYE.
Class 1 is paid monthly, so students assume Class 1A is too.
Fix: Class 1A is paid once a year after the tax year ends. The date is 22 July if electronic and 19 July if by cheque.
Forgetting the deduction for the employer.
Students stop at the NIC figure and do not link it to the profit computation.
Fix: Add a line saying the Class 1A cost is an allowable expense for income tax or corporation tax purposes.

Worked examples

Example 1

For 2025/26, Zed Ltd provides its director with a petrol car with a list price of £32,000 and an appropriate percentage of 30%, available all year, with free fuel for private use. It also pays private medical insurance with a cash equivalent of £1,200. Compute the Class 1A NIC payable.

Show the solution

Car benefit = £32,000 × 30% = £9,600.
Fuel benefit = £28,200 × 30% = £8,460.
Medical insurance = £1,200.
Total cash equivalent = £9,600 + £8,460 + £1,200 = £19,260.
Class 1A NIC = £19,260 × 15% = £2,889.

Answer: Class 1A NIC is £2,889, paid by the employer by 22 July 2026 if paid electronically. The director pays no NIC on these benefits.

Example 2

For 2025/26, Kay Ltd provides one employee with a zero-emission electric car with a list price of £48,000, available all year. A second employee has a company van with fuel for private use. Compute the Class 1A NIC and state when it is due.

Show the solution

Electric car benefit = £48,000 × 3% = £1,440.
Van scale charge = £4,020.
Van fuel benefit = £769.
Total cash equivalent = £1,440 + £4,020 + £769 = £6,229.
Class 1A NIC = £6,229 × 15% = £934.35, which is £934 to the nearest £.
Due date: 22 July 2026 if paid electronically, or 19 July 2026 if paid by cheque.

Answer: Class 1A NIC is £934, due by 22 July 2026 if paid electronically (19 July if by cheque). The cost is deductible in Kay Ltd's profit computation.

Exam tips

Show the benefit workings separately, then the total and the 15%. Marks are given for each benefit value even if the final NIC is wrong.
Pick up the car percentage, the £28,200 base, and the van figures from the tax tables, and state which table you used.
Check for part-year availability and employee contributions before totalling.
Mention the employer-only point and the payment date in one sentence each. These are easy marks.
In planning questions, compare the Class 1A cost of a benefit against paying cash salary, which would attract employer Class 1 NIC and employee NIC.

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

Class 1A NIC on Benefits in Kind in other exams

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

ACCA Applied SkillsClass 1A NIC on Taxable Benefits

Class 1A NIC on Benefits in Kind: frequently asked questions

What is the rate of Class 1A NIC?

The rate is 15%, as given in the tax tables ACCA provides. It applies to the whole of the taxable benefit, with no threshold.

Who pays Class 1A NIC?

Only the employer pays it. The employee still pays income tax on the benefit, but has no NIC on it.

When is Class 1A NIC due?

It is due after the end of the tax year. The normal date is 22 July if paid electronically, and 19 July if paid by cheque. The P11D forms are due by 6 July.

Which benefits are subject to Class 1A NIC?

Taxable benefits in kind such as company cars, car fuel, vans, private medical insurance and living accommodation. Exempt benefits, benefits already in Class 1 through the payroll, and benefits covered by a PAYE settlement agreement are outside it.