How is the total amount of a company's PAYE and NIC liabilities calculated under section 1059 of CTA 2009?

Section 1059 requires combining two amounts: amount A, representing the company's PAYE obligations (income tax deducted under the Pay As You Earn system), and amount B, representing the company's national insurance contributions liability including both primary and secondary Class 1 contributions, subject to certain exclusions for joint elections.

What NIC contributions are excluded from amount B under section 1059?

Amount B excludes Class 1 national insurance contributions where the company and employee have made a joint election to transfer the NIC liability to the employee. This joint election mechanism exists under paragraph 3B of Schedule 1 to the Social Security Contributions and Benefits Act 1992, typically used in share-based remuneration arrangements.

What types of national insurance contributions does amount B include under section 1059?

Amount B is broadly drawn and includes both primary Class 1 contributions, which are technically the employee's liability but collected by the employer, and secondary Class 1 contributions, which are the employer's own liability. However, contributions subject to a joint election transferring liability to employees are excluded from the calculation.

Where is the definition of national insurance contributions found for the purposes of section 1059 CTA 2009?

The definition of 'national insurance contributions' for the purposes of section 1059 and the wider employment tax relief provisions is set out separately in section 1319 of the Corporation Tax Act 2009. Accountants should refer to that section to confirm the precise scope of contributions included in any computation.

Corporation Tax Act 2009 section 1059

Total amount of company's PAYE and NIC liabilities

Section 1059 explains how to calculate the total amount of a company's PAYE and national insurance contributions (NIC) liabilities for the purposes of the employment tax relief provisions.

The total liability is made up of two components: the company's PAYE liability (amount A) and its NIC liability (amount B).
Amount B covers both primary (employee) and secondary (employer) Class 1 national insurance contributions.
Amount B does not include Class 1 contributions where the company and employee have jointly elected to transfer the liability to the employee.
The definition of "national insurance contributions" for these purposes is set out separately in section 1319 of the Act.

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