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National Insurance Contributions and Statutory Payments Act 2004

Employers’ Liability for National Insurance contributions

Section 1 – Payment of Class 1 contributions: Great Britain

48.Section 1 amends paragraph 3 of Schedule 1 to the CBA 1992 in order to extend the employer’s ability to recover primary Class 1 contributions from his employee in respect of non-monetary earnings.

49.Subsection (3) amends paragraph 3 of Schedule 1 to the CBA 1992 so as to insert sub-paragraphs (3A) and (3B) after sub-paragraph (3). These sub-paragraphs apply where an employer makes a payment of non-monetary earnings to an employee. They allow the employer to recover primary Class 1 contributions paid on the employee’s behalf in the manner prescribed by regulations. It is intended that regulations will allow the employer, with the written consent of the employee, to recover the primary Class 1 contributions by either:

  • retaining some or all of the securities; or

  • requiring the employee to sell some or all of the securities and using the proceeds to reimburse the employer.

It is intended that regulations will also allow the employer and employee to enter into written agreements about methods of recovery at any time up to the day that the securities-based earnings are treated as paid.

50.Subsection (4) amends paragraph 3(4) of Schedule 1 to the CBA 1992 to allow recovery of primary Class1 contributions in respect of ex-employees in the tax year following the year of cessation of their employment. Sub-paragraph 3(4) previously limited recovery to the year in which the employee ceased the employment.

51.Subsection (5) amends paragraph 3(5) by removing paragraph (b). This has been omitted because the new sub-paragraphs (3A) and (3B) now allow recovery of primary Class 1 contributions from employees in respect of non-monetary earnings, thus sub-paragraph 3(5)(b) becomes an unnecessary repetition. Paragraph 3(5)(b) also limited the options for making regulations concerning the forms of recovery to cases where the employee was ceasing employment in the tax year and there were insufficient cash earnings from which the deductions could be made. These restrictions have been removed to allow paragraph 7 of Schedule 4 to the Social Security (Contributions) Regulations 2001 (S.I. 2001 No. 1004)(2) to be amended to enable employers to recoup the primary contributions on security-based earnings by withholding sufficient securities to cover the cost of these contributions.

52.Section 2 – Payment of Class 1 contributions: Northern Ireland

53.Section 2 replicates the provisions of Section 1 in respect of the CB(NI)A 1992.


As amended by regulation 7 of the Social Security (Contributions) (Amendment No. 5) Regulations 2002 (S.I. 2002 No. 2929), regulation 2 of the Social Security (Contributions) (Amendment No. 4) Regulations 2003 (S.I. 2003 No. 1337) and regulation 31(3) of the Social Security (Contributions, Categorisation of Earners and Intermediaries) (Amendment) Regulations 2004 (S.I. 2004 No.770)


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