Class 1A National Insurance is an employer only charge on most taxable benefits in kind, such as company cars and private medical insurance. For the 2025/26 tax year the rate is 15%, calculated on the total taxable value of the benefits provided. You report it on form P11D(b) after the tax year ends, submit it by 6 July, and pay by 22 July electronically or 19 July by cheque. Employees pay no Class 1A themselves.

If you provide staff with anything beyond ordinary pay, from a company car to health cover, you almost certainly have a Class 1A National Insurance liability. It is one of the most common areas HMRC examines because the rules are easy to get slightly wrong. This guide explains what Class 1A is, how it is calculated, when it falls due, and how it differs from the Class 1 National Insurance you already deduct through payroll.

What is Class 1A National Insurance?

Class 1A is a National Insurance contribution paid only by the employer on the value of most taxable benefits in kind given to employees and directors. Unlike other National Insurance classes, there is no employee element, so nothing is deducted from the individual’s pay for it. It exists so that benefits, which are effectively a form of reward, carry a broadly similar National Insurance cost to cash wages.

Typical benefits that attract Class 1A include company cars and the associated fuel, private medical and dental insurance, gym memberships, and non business travel. Some benefits are exempt, and understanding which ones fall outside the charge is central to getting your figures right. Our guide to benefits in kind and the P11D sets out how each benefit is valued and reported.

What is the Class 1A rate for 2025/26?

The Class 1A rate for the 2025/26 tax year is 15%. It is charged on the total taxable value of the benefits you have provided across the year, not on each employee individually. So if the combined cash equivalent of all reportable benefits comes to £40,000, the Class 1A due is £6,000. The rate mirrors the employer secondary Class 1 rate, which is why the two figures moved together when employer National Insurance was increased.

Because the charge is a straight percentage of benefit value, controlling the cost usually means reviewing the benefits themselves. Small tax free perks can help here, and our note on the trivial benefits exemption explains which low value gifts sit entirely outside both tax and Class 1A.

How and when do you report and pay Class 1A?

Class 1A is reported after the end of the tax year on form P11D(b), which is your declaration of the total Class 1A National Insurance owed. Alongside it, each employee’s individual benefits are reported on a P11D unless you have already dealt with them through payroll. The key dates are:

  • 6 July: deadline to submit your P11D forms and your P11D(b), and to give employees a copy of their benefit details.
  • 22 July: deadline to pay the Class 1A National Insurance if you pay electronically.
  • 19 July: earlier deadline if you pay by cheque.

Missing the 6 July filing date triggers a penalty of £100 per 50 employees for each month or part month the P11D(b) is late, and late payment attracts interest. Diarising these dates well ahead of the summer is the simplest way to stay clear of avoidable charges.

Do payrolled benefits still need a P11D(b)?

Yes. Even if you tax your benefits in kind through payroll rather than on individual P11D forms, the Class 1A National Insurance is still due, and you still need to submit a P11D(b) to declare and pay it. Payrolling changes how the income tax on the benefit is collected from the employee, but it does not remove the employer’s Class 1A liability. This catches out businesses that assume payrolling means no further reporting, so the P11D(b) remains a fixed part of the year end routine.

How is Class 1A different from Class 1 National Insurance?

The two are easy to confuse but they cover different things. Class 1 is charged on earnings, meaning cash pay such as salary, bonuses and commission. It has both an employee element deducted from wages and an employer element, and it is collected in real time through payroll each pay period. Class 1A is charged only on the value of benefits in kind, is paid solely by the employer, and is settled once a year after the tax year closes.

In short, Class 1 follows the money paid to your people, while Class 1A follows the perks provided to them. Directors weighing how to take income should factor both into the picture, which is where our comparison of salary versus dividends and the guidance on the Employment Allowance are useful reading. For the wider set of employer tax topics, see our accountancy and tax guide.

Keeping your Class 1A reporting compliant

Benefit valuations, exemptions and the P11D(b) declaration are exactly the sort of detail HMRC returns to during a compliance check. Accurate records of every benefit provided, and a clear reconciliation between your P11D entries and the Class 1A paid, are your best protection if questions arise.

Employer benefits and P11D reporting are common areas for HMRC compliance checks, and even a well run payroll can attract enquiry. A Solar Protect tax investigation policy covers up to £100,000 of your accountant’s fees with no excess, so you have expert representation without the worry of the bill. Get a quote to protect your business today.

Reviewed by Matthew Bartlett, Director, Solar Protect. This guide is general information, not personalised tax or financial advice. Figures are correct for the 2025/26 and 2026/27 UK tax years at the time of writing.