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Class 1 NIC

A primary Class 1 liability applies to payments to employees unless they are:

1. •

   under the age of 16 when the payment is made

2. •

   employees of certain overseas organisations

3. •

   over the age of state retirement age (see the Employee reaches retirement age guidance note)

A secondary liability to Class 1 NIC arises on payments by employer even in the case of employees over retirement age as the employer’s liability continues even though the employee ceases to be liable to NIC at this point.

Class 1 NIC is payable on an employee’s earnings. There are two types of Class 1 liability: primary Class 1 NIC liability payable by the employee (sometimes known as ‘employee’s contributions’) and secondary Class 1 NIC liability payable by the employer (sometimes known as ‘employer’s contributions’).

Certain payments are disregarded for the purposes of Class 1 NIC. These include:

1. •

   the reimbursement of expenses

2. •

   payments in kind

3. •

   the