NIM18080 - Class 1B NICs: liability: calculation: example
Class 1B NICs are payable on:
- the value of all items covered by the PAYE Settlement Agreement (PSA) which would normally give rise to a Class 1 or Class 1A liability
- the total amount of tax payable by the employer under the PSA.
Example
800Â employees pay tax at the basic rate and 200 pay at the higher rate.
»Ê¹ÚÌåÓýapp value of items covered by the PSA which give rise to a Class 1 and Class 1A liability is £50,000.
»Ê¹ÚÌåÓýapp tax and Class 1B NICs payable under a PSA for 2025 to 2026 tax year and covering the whole workforce would be calculated as follows:
| Type | Amount |
|---|---|
Value of benefits provided to basic rate employees (800 x £50) |
= £40,000 |
Tax due @ 20% on £40,000 |
= £8,000 |
Gross up tax £8,000 x 100/(100 - 20) |
= £10,000 |
Value of benefits provided to higher rate employees (200 x £50) |
= £10,000 |
Tax due @ 40% on £10,000 |
= £4,000 |
Gross up tax £4,000 x 100/(100 - 40) |
= £6,666.67 |
Total Tax Due |
= £16,666.67 |
Value of items liable for NICs |
= £50,000 |
Class 1B NICs Due (£16,666.67 + £50,000) x 15% |
= £10,000.00 |