There is a general prohibition on employers obtaining an indemnity from employees in respect of the cost of secondary (employer’s) national insurance contributions. There is an exception to this for NICs arising in respect of certain forms of employee share plans. This allows for either an election to be made for the liability to pay the NICs to be transferred to the employee or an agreement for the employee to reimburse the employer for the cost of the NICs.

An election provides greater protection for the employer with there being a transfer of liability, but requires HMRC approval. HMRC are now consulting as to whether there is any advantage in retaining NIC elections. Please click here to read the Employee Share Schemes NIC Elections Consultation document.

As a named stakeholder, Pett Franklin will be responding to the consultation. If you have comments and wish those to be reflected in our response, please call 0121 281 5798 or email enquiries@pettfranklin.com.

Pett, Franklin & Co. LLP are experts in employee share schemes, share plans and executive incentives.