Members have asked for further coverage on AccountingWEB of National Insurance matters. David Harris is a barrister specialising in National Insurance matters and begins this occasional series by considering the earnings on which Class 1 contributions are payable.
It is popularly supposed that earnings for Class 1 purposes are equivalent to the amount on which tax is paid. There are, however, a number of differences which a prudent employer will take into account, and the more significant of these are considered below.
As is well known, expenses may only be deducted for tax purposes if they are wholly, exclusively and necessarily incurred in the performance of the duties of the employment. For National Insurance purposes, the rules are much less strict, the...