Quick answer: Class 1A NICs are National Insurance contributions that employers pay on most taxable benefits in kind, such as company cars, private medical insurance, and beneficial loans, as well as on termination awards over £30,000. The rate is 15% of the benefit’s taxable value. You report Class 1A NICs on your P11D(b) by 6 July after the end of the tax year, and pay HMRC by 22 July (or 19 July if you pay by post). Employees don’t pay Class 1A. It’s an employer-only cost.
Paying your employees for their hard work is a given. But from time to time, you might want to offer something extra to recognise their efforts. Sometimes that’s a one-off bonus. More often, it’s an ongoing benefit that helps with productivity, engagement, and retention.
That benefit could be a phone for sales calls, a company car for client visits, or private medical insurance. Whatever it is, if it’s a taxable benefit, you’ll usually need to pay Class 1A National Insurance contributions (NICs) on it, and pay them on time.
In this guide, we’ll explain what Class 1A NICs are, how to work them out, and how to pay them.
What are Class 1A NICs?
Class 1A NICs are National Insurance contributions that UK employers pay on taxable benefits in kind (non-cash perks like company cars or private medical insurance) provided to employees. The Class 1A rate is currently 15%.
Class 1A NICs at a glance
- Who pays: Employers only. Class 1A isn’t deducted from employees’ pay.
- Rate: 15%.
- Reporting: On your P11D(b), by 6 July after the end of the tax year.
- Payment deadline: 22 July if you pay electronically, or 19 July if you pay by post.
As an employer, you pay Class 1A NICs on most benefits you provide to your employees, such as private medical insurance.
You must pay Class 1A NICs on benefits provided to:
- Directors and senior employees.
- Other employees.
- Family or household members of the above, where they also receive benefits.
And Class 1A only applies when:
- The benefit isn’t already subject to Class 1 NICs.
- The benefit is provided because of the person’s employment.
- The benefit is subject to Income Tax.
Class 1A NICs vs. Class 1 NICs
| Class 1A NICs | Class 1 NICs | |
|---|---|---|
| Who pays | Employers only | Employers and employees |
| What triggers them | Benefits in kind (non-cash perks) | Cash earnings (salary, wages, and bonuses) |
| How they’re calculated | Taxable value of the benefit × 15% | A percentage of earnings above the relevant threshold |
What benefits are subject to Class 1A NICs?
Here are some examples of benefits that attract Class 1A National Insurance:
- Company cars.
- Living accommodation.
- Private medical insurance.
- Termination awards exceeding the £30,000 threshold that have not already been subject to class 1 NICs deductions.
- Beneficial loans
When are you exempt from paying Class 1A NICs?
You don’t have to pay Class 1A NICs on:
- Trivial benefits: Small perks worth £50 or less, such as taking an employee out to celebrate their birthday. To qualify, the benefit can’t be cash or a cash voucher, a reward for their work or performance, or part of their contract.
- Non-taxable benefits: Benefits that aren’t subject to Income Tax.
- Benefits for people who aren’t employed earners: Where the person receiving the benefit doesn’t meet the definition of an “employed earner”.
- Benefits covered by a PAYE Settlement Agreement (PSA): These are covered by Class 1B NICs instead.
Get the latest insights and best practice guides, direct to your inbox.
How to calculate Class 1A NICs
Formula: Taxable value of the benefit × 15% = Class 1A NICs due
First, work out the total taxable value of the benefits you’ve provided to your employees. Then multiply that total by the Class 1A rate of 15%.
Here’s an example. If you provided £5,000 worth of private medical insurance in the 2026/27 tax year, your Class 1A NICs would be £5,000 × 15% = £750.
How to report your contributions
To report Class 1A NICs to HMRC, submit a P11D(b) form by 6 July after the end of the tax year.
The P11D(b) tells HMRC the total value of the taxable benefits you’ve provided and how much Class 1A National Insurance you owe. You’ll also need to submit P11D forms for any benefits that weren’t payrolled.
When to pay your contributions
So, here’s where it starts to get complicated.
Depending on what your Class 1A National Insurance contributions are for: Benefits in kind (BIK) or termination awards, the deadline is different.
For benefits in kind
You must pay your employers’ Class 1A National Insurance on work benefits by 22 July after the end of the tax year (or 19 July if you pay by post). For the 2026/27 tax year, that’s 22 July 2027.
If the deadline falls at a weekend or on a bank holiday, your payment must reach HMRC by the last working day before it, unless you pay by Faster Payments.
Payrolling of benefits in kind is changing too. Mandatory payrolling starts on 6 April 2027, beginning with company cars, vans, fuel, and medical cover, with most other benefits following from April 2028. For payrolled benefits, Class 1A NICs will be calculated and paid in real time through PAYE, rather than once a year. That means July 2027 will be a transition month: you’ll pay your 2026/27 Class 1A NICs as usual, while also paying real-time Class 1A NICs on payrolled benefits from April 2027. For more on what this means for you, read our guide to mandatory payrolling of benefits in kind from April 2027.
For termination awards
You must pay Class 1A National Insurance on termination awards when you pay your PAYE bill, whether its monthly or quarterly.
How to pay your contributions
You can use the following bank details to pay HM Revenue and Customs (HMRC):
Sort Code: 08 32 10
Account Number: 12001039
Account Name: HMRC Cumbernauld
You’ll need a 17-character payment reference. That’s your 13-character Accounts Office reference (on the letter HMRC sent when you first registered as an employer), followed by four digits for the tax year you’re paying for: the last two digits of the year the tax year ends, then “13”. If you leave the tax year digits off, HMRC will put your payment towards the current tax year instead.
For example: if you’re paying in July 2027 for the 2026/27 tax year, and your Accounts Office reference is 123PA00012345, your payment reference would be 123PA000123452713.
Before you pay, check your bank’s transaction limits and processing times. As a guide:
- Faster Payments, CHAPS, or approving a payment through your online bank account: Usually reach HMRC on the same or next day.
- Bacs: Usually takes three working days.
You can also pay:
- By debit or corporate credit card online: There’s no fee for personal debit cards, but there’s a non-refundable fee for corporate credit and debit cards, and you can’t pay by personal credit card. Make your payment to the “HMRC Cumbernauld” office, using your 17-character payment reference.
- By Direct Debit: You can make a single payment through your HMRC online account, using your 17-character payment reference. It takes three working days if you’ve already set up a Direct Debit with HMRC, or five working days if you haven’t.
If you want to send cheques by post
If you’re paying by cheque, make sure it reaches HMRC by 19 July. Make it payable to “HM Revenue and Customs only” and send it to:
HMRC
Direct
BX5 5BD
Write your Class 1A payment reference on the back of the cheque. That’s your 13-character Accounts Office reference, followed by the tax year and “13”. If you have a payslip from HMRC, include it with your cheque. Don’t fold the cheque or payslip, or fasten them together.
Any mistakes on the cheque can delay your payment, so it’s worth double-checking before you send it.
If you are making overseas payments
If you’re paying Class 1A NICs from an overseas bank account, use these details and pay in sterling:
- Account number (IBAN): GB62BARC20114770297690
- Bank Identifier Code (BIC): BARCGB22
- Account name: HMRC Cumbernauld
- HMRC banking address: Barclays Bank PLC, 1 Churchill Place, London, United Kingdom, E14 5HP
Use the same 17-character payment reference as you would for a UK bank transfer.
How to check if HMRC received your payment
There are a few ways you can see if your payment has gone through:
- Check your bank or building society statement (it will indicate whether the payment has been debited from your account).
- Check your HMRC online account.
- Request a receipt (if you’re sending the payment by mail).
Still in need of help?
We get it, it’s a lot for you to wrap your head around. But don’t worry, with Cintra you’re in safe hands, as our powerful, cloud-based payroll software can efficiently handle all your BIKs. Book a demo today to see how we can help.
Payroll Legislation Guide
The facts, figures, thresholds and allowances for 2026/27 spanning tax, National Insurance, pensions, statutory payments and more.
Frequently asked questions
Q. What is the Class 1A National Insurance rate for 2026/27?
A. The Class 1A rate is 15% for 2026/27. You multiply the taxable value of the benefits you provide by 15% to work out what you owe.
Q. Who pays Class 1A NICs?
A. Employers pay Class 1A NICs. They aren’t deducted from employees’ pay.
Q. When is Class 1A National Insurance due?
A. For benefits in kind, you report Class 1A NICs on your P11D(b) by 6 July and pay by 22 July after the end of the tax year (or 19 July if you pay by post). For 2026/27, the payment deadline is 22 July 2027. Class 1A NICs on termination awards are paid with your regular PAYE bill.
Q. Do I pay Class 1A NICs on payrolled benefits?
A. Yes. Payrolling a benefit changes how Income Tax is collected, but you still owe Class 1A NICs on it. From April 2027, when mandatory payrolling starts, Class 1A NICs on payrolled benefits will be paid in real time through PAYE.
Q. What payment reference do I use for Class 1A NICs?
A. Use your 13-character Accounts Office reference, followed by the last two digits of the year the tax year ends and “13”. For the 2026/27 tax year, that means adding “2713” to the end.
