Class 1A NIC

Class 1A National Insurance Contributions are an employer-only NI charge on the cash equivalent of most taxable benefits in kind — company cars, private medical insurance, beneficial loans, gym memberships and so on. There is no equivalent employee NI on these benefits; the cost falls entirely on the employer.

The Class 1A rate equals the main employer Class 1 rate. For 2025/26 onwards this is 15%, up from 13.8% in earlier years. Class 1A is calculated for the whole tax year together, declared on form P11D(b) by 6 July following the end of the tax year, and paid by 22 July (electronic) or 19 July (cheque). It does not appear on individual payslips because the employee never bears the cost.

Worked example: Northwood Ltd provides company cars to four directors with a combined cash equivalent of £40,000 for 2026/27, and private medical insurance covering 30 staff with a total benefit value of £18,000. Class 1A NIC at 15% is therefore £8,700, declared on the P11D(b) and paid in July 2027. Class 1B NIC, payable on items inside a PAYE Settlement Agreement, uses the same rate. Note that from April 2026 most benefits are payrolled — but Class 1A is still settled annually rather than per pay period, so P11D(b) and Class 1A continue.