Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

National Insurance Contributions definition

What does National Insurance Contributions mean? National Insurance contributions (NICs) are payments made by employees, employers and the self-employed to HMRC—or credited—so individuals build entitlement to the UK State Pension and other contributory social security benefits. NICs are a statutory concept defined primarily in the Social Security Contributions and Benefits Act 1992 (and the Northern Ireland 1992 Act) and related regulations. NICs are distinct from income tax but are usually calculated and reported via PAYE or self assessment. Amounts collected are paid into the National Insurance fund (Great Britain) or the Northern Ireland National Insurance Fund and finance the new State Pension, contributory Employment and Support...

UK employment-related securities: tax indemnities—drafting, PAYE/NIC recovery, s222 ITEPA and RCAs; application to EMI, CSOP, SAYE and SIP

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Practice notes

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Introduction

A tax indemnity allows an employer to recoup income tax and national insurance contributions (NICs) from an employee, typically through a range of methods to keep flexibility for both sides. Within share schemes, they are especially significant because an employer may need to settle substantial sums with HMRC and, without a binding recovery mechanism, could be left exposed. Where income tax becomes due on employment related securities or options, an employer may still be required to account for that tax to HMRC even if no cash is received. Generally, this duty arises where the securities are ‘readily convertible assets’ (RCAs) or deemed RCAs at the time of the taxable event, or where the employee receives cash or RCAs in connection with them. For further guidance on when shares constitute RCAs, see Practice Note: Share options and readily convertible assets. Additionally, an employer can have an obligation to account for tax even if the securities are not RCAs in certain circumstances, for example where a charge is triggered by the anti-avoidance legislation in Part 7A of the...

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Karen Cooper

Cooper Cavendish

Karen is an experienced employee benefits lawyer with more than 20 years’ experience in advising companies of all sizes in relation to their employee benefit and remuneration issues. She trained and worked for leading law firms Baker McKenzie LLP and Linklaters LLP and spent three years as a remuneration consultant at Ernst & Young LLP. Prior to co-founding Cooper Cavendish, Karen headed up Osborne Clarke LLP's employee benefit practice for 15 years.Karen is a thought-leader and regularly speaks and presents at industry conferences and events. She is a member of the Small Quoted Companies Alliance Share Scheme Committee and the Share Plan Lawyers Organisation.Karen is also the author of a wide range of legal publications including the chapter on executive remuneration in Sweet & Maxwell’s ‘Corporate Governance’, the chapter on employee share schemes in Jordan’s Company...

Web page updated on 22/05/2026

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