Income Tax (Earnings and Pensions) Act 2003 section 442A

Relief for secondary Class 1 contributions met by employee

Section 442A provides income tax relief to employees who bear the cost of their employer's secondary Class 1 National Insurance contributions arising on chargeable events relating to convertible securities.

• Where an employee pays or assumes liability for the employer's secondary Class 1 NICs under a formal NIC Agreement or NIC Election, income tax relief is available against the employment income arising on a convertible securities chargeable event
• The relief equals the amount of employer's NICs actually recovered from the employee under an Agreement (provided recovery occurs before 5 June following the relevant tax year), plus any liability transferred to the employee under an Election
• If approval of a NIC Election is withdrawn, the relief is capped at the amount the employee has actually paid before 5 June following the tax year in which the chargeable event occurs
• The relief reduces the amount counting as employment income for income tax purposes but does not reduce the earnings figure used to calculate National Insurance contributions under the Social Security Contributions and Benefits Act 1992