Modelling Class 1A NIC and P11D impacts

Updated August 2026 for the 2026/27 tax year.

Why National Insurance modelling matters

The employer's secondary National Insurance saving on sacrificed salary is an important part of the business case. It must be considered alongside Class 1A National Insurance on the taxable company car benefit.

A sound modelling approach

Start with the employee's post-sacrifice gross salary. Calculate the employer secondary National Insurance reduction, then calculate the annual taxable benefit using the vehicle's P11D value and the applicable BIK percentage. Apply the Class 1A rate to that taxable benefit.

Keep these elements separate in the model:

• gross annual salary sacrifice
• employer secondary National Insurance saved
• P11D value and applicable BIK rate
• annual taxable benefit
• Class 1A National Insurance due
• any employer contribution or reinvested saving
• provider fees, insurance and risk costs

For the employee-side calculation, use the salary sacrifice car calculator UK. To isolate the employer-side effect, use the employer NI savings calculator.

Common pitfalls

Do not apply the BIK percentage to the lease rental. It applies to the HMRC list price or P11D value. Do not treat the secondary National Insurance saving as the employer's final net saving until Class 1A, contributions and programme costs have been deducted.

Payroll rounding, timing, leavers, variable pay and National Minimum Wage checks can also affect actual results. Validate the model with payroll and tax advisers before committing budget or communicating employee savings.