NI on Benefits in Kind (Class 1A)

Key facts

Class 1A NI rate: 15% from April 2025 (previously 13.8%).
Paid by the employer only — employees do not pay Class 1A NI.
Applies to the taxable value of benefits in kind reported on form P11D.
Due by 22 July after the end of the tax year (19 July if paying by cheque).
Payrolled benefits still attract Class 1A, but it is collected through regular PAYE.

What Is Class 1A NI?

Class 1A National Insurance is a charge paid by employers on the taxable value of most benefits in kind (BIKs) provided to their employees. It is separate from the Class 1 NI paid on salary — Class 1A covers non-cash benefits that have a taxable value.^[2]

The key points are:

It is an employer-only charge — employees do not pay Class 1A
It is calculated at the same rate as employer Class 1 NI: 15% from April 2025
It applies to the cash equivalent (taxable value) of each benefit
It covers benefits reported on form P11D, or payrolled through PAYE

Common Benefits Subject to Class 1A

The following benefits in kind attract Class 1A NI when provided to employees:^[4]

Benefit	How the Taxable Value Is Calculated	Example Class 1A (at 15%)
Company car	List price × CO2 percentage	£8,000 value = £1,200
Car fuel for private use	Fixed multiplier (£27,800 in 2025/26) × CO2 percentage	£5,560 value = £834
Private medical insurance	Premium paid by employer	£1,500 premium = £225
Beneficial loan (over £10,000)	Loan amount × official rate of interest	£400 benefit = £60
Living accommodation	Annual value or rent paid by employer	Varies widely
Gym membership / subscriptions	Cost to employer	£600 cost = £90

Benefits Exempt from Class 1A

Not all benefits attract Class 1A NI. The following are typically exempt:^[4]

Employer pension contributions
Childcare vouchers (legacy scheme, within exempt limits)
Cycle-to-work scheme bikes (within salary sacrifice rules)
Workplace canteens available to all staff
Mobile phones (one per employee for business use)
Work-related training
Staff parties and events costing £150 or less per head per year
Trivial benefits costing £50 or less per occasion

Note: Benefits that are already subject to Class 1 NI through payroll (e.g. cash bonuses or vouchers easily convertible to cash) are not subject to Class 1A. Class 1A only applies to non-cash benefits that are not put through payroll as earnings.

Reporting via P11D

The traditional method of reporting benefits in kind is via form P11D, submitted to HMRC after the end of each tax year:^[1]

P11D — lists the taxable benefits provided to each employee during the tax year
P11D(b) — summarises the total Class 1A NI due across all employees
Filing deadline: 6 July following the end of the tax year
Payment deadline: 22 July (electronic) or 19 July (cheque)

Example timeline for 2025/26:

Tax year: 6 April 2025 to 5 April 2026
P11D and P11D(b) filing deadline: 6 July 2026
Class 1A NI payment deadline: 22 July 2026

Payrolling Benefits in Kind

Since April 2016, employers have had the option to “payroll” benefits in kind instead of reporting them on a P11D. From April 2026, payrolling will become mandatory for most benefits.^[3]

How Payrolling Works

The taxable value of the benefit is added to the employee’s gross pay each pay period
Income Tax is deducted through PAYE on the grossed-up amount
Class 1A NI is still charged (not Class 1), but it is collected as part of your regular monthly employer NI payment
No P11D is needed for payrolled benefits

Advantages of Payrolling

Removes the need to file P11Ds for payrolled items
Employees pay tax in real time rather than through a tax code adjustment the following year
Employer NI (Class 1A) is spread across the year instead of one lump sum in July
Simpler administration once set up

Tip: Even when you payroll benefits, Class 1A NI (not Class 1) applies. This is important because Class 1A is employer-only, so the employee does not pay NI on the benefit — only Income Tax. Do not accidentally apply Class 1 NI rates to payrolled benefits.

Calculating Class 1A NI

The total Class 1A NI for a tax year is calculated as:^[2]

Class 1A NI = 15% × total taxable value of all benefits in kind

Worked example — employer provides three benefits:

Company car (taxable value): £6,200
Private medical insurance: £1,800
Beneficial loan interest: £350
Total benefits: £8,350
Class 1A NI: 15% × £8,350 = £1,252.50

Class 1A vs Class 1: Key Differences

Feature	Class 1 (Secondary)	Class 1A
Applies to	Cash earnings (salary, bonuses)	Benefits in kind (non-cash perks)
Rate (2026/27)	15%	15%
Paid by	Employer (plus employee pays primary)	Employer only
Threshold	Secondary Threshold (£5,000/yr)	No threshold — applies to full benefit value
Payment timing	Monthly through PAYE	Annually by 22 July (or monthly if payrolled)
Reporting	FPS (Real Time Information)	P11D and P11D(b), or payroll

Frequently Asked Questions

What is Class 1A National Insurance?

Class 1A NI is employer-only National Insurance charged on most benefits in kind (non-cash perks) provided to employees. It is calculated at 15% (from April 2025) on the taxable value of the benefit. Employees do not pay Class 1A — only the employer.

Which benefits in kind are subject to Class 1A NI?

Most taxable benefits attract Class 1A NI, including company cars, fuel for private use, private medical insurance, beneficial loans above £10,000, living accommodation, and gym memberships. Exempt benefits like employer pension contributions and cycle-to-work scheme bikes (within limits) are not subject to Class 1A.

When is Class 1A NI due?

For benefits reported on P11D, Class 1A NI for the tax year is due by 22 July following the end of the tax year (19 July if paying by cheque). For example, Class 1A on 2025/26 benefits is due by 22 July 2026. For payrolled benefits, Class 1A is collected through regular monthly PAYE payments.

What is the difference between payrolling benefits and using P11D?

With P11D reporting, you report the benefit value to HMRC after the tax year ends and pay Class 1A NI as a lump sum by 22 July. With payrolling, you add the benefit value to the employee’s taxable pay each month, collecting Income Tax through PAYE and paying Class 1A NI as part of your regular monthly employer NI payment.

Sources

Pay tax on company benefits (P11D) — GOV.UK
Class 1A National Insurance contributions on benefits in kind — GOV.UK
Payrolling employees taxable benefits and expenses — GOV.UK
Expenses and benefits for employers — GOV.UK