The Child Support, Pensions and Social Security Act 2000
Social Security (Contributions) Regulations 2001 SI 2001/1004
Social Security (Contributions) (Amendment No. 7) Regulations 2003 SI 2003/2958

Employers sometimes pay employees by providing them with assets (usually readily converted into cash) rather than with normal cash remuneration with a view to avoiding liability for National Insurance contributions. The Contributions Agency does not accept that such payments avoid NIC liability but to place the matter beyond doubt the contributions regulations have been changed.

The amount on which to assess NICs will be the best estimate that the employer can reasonably make of the amount of income likely to be chargeable to tax under Schedule E and accounted for via PAYE.

In general (subject to a few minor exceptions) non-cash vouchers for which there is exemption from income tax also qualify for exemption from NIC's.

The Social Security contribution changes mirror PAYE income tax changes. Class 1A NIC are extended to most benefits in kind from 6th April 2000 by the Child Support, Pensions and Social Security Act 2000 although employer provided childcare remains exempt (see reg 40(5) of Social Security (Contributions) Regulations 2001 SI 2001/1004 and see also notes at Social Security/NATIONAL INSURANCE CONTRIBUTIONS/child care vouchers ). There are details in 2000/08/11 - Inland Revenue Press Release 136.