Tx notes fa22 Final

1.2. Class 1A Contributions 
The rate of Class 1A NIC is payable only by employers on taxable benefits provided to employees. 
The rate is 15.05% multiplied by the assessable value of the benefits.
2. Employment Allowance 
HMRC introduced an annual employment allowance of £5,000 per EMPLOYER to reduce the 
Employer’s Class 1 NIC payable. 
For example if the employer’s Class 1 NIC for the tax year is £6,000 the amount payable will be 
reduced by the £5,000 employment allowance to £1,000. If the total employer’s Class 1 NIC was say 
£2,500 then this would be reduced to nil.
The employment allowance is not available to companies where a director is the sole employee. This 
restriction has been introduced because the employment allowance is targeted at businesses which 
support employment. 
The employment allowance does not reduce the amount of employer Class 1A NIC payable nor will it 
serve to reduce the amount of Class 1 employee’s NIC.

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Example 1
 
 
An employee of Riga Ltd is paid £60,000 per annum, and was provided with the following taxable 
benefits during 2022/23:
Calculate the Class 1 and Class 1A NIC liabilities in respect of this employee. 
3. Self-employed earners 
3.1. Class 2 contribution 
(a)
Self-employed earners pay a flat rate contribution of £3.15 per week from their 16th birthday 
until they reach pensionable age when the tax adjusted trading profit assessed for the tax year 
exceed a small profits threshold of £12,570. Class 2 NIC is payable under the self-assessment 
system and will be due on 31 January following the tax year. Thus for 2022/23 it will be due on 
31 January 2024 along with the Class 4 NIC below.