[NIM12020] Class 1: Calculating Class 1 NICs for Directors: Directors' loan accounts: Other liabilities
Regulation 22 Social Security (Contributions) Regulations 2001
If the directors make withdrawals which are not earnings or on account of earnings, the withdrawals may place the directors in debt to the company. If there is a tax charge on the individual under Chapter 7 of Part 3 of ITEPA 2003 (previously s160 ICTA 1988(‘beneficial loans’)) from 6 April 2000, there will also be a Class 1A NICs charge on the employer (see NIM13000 onwards). But you should note that a write-off of a loan is considered to be a payment of earnings liable to Class 1 within s3 and s6 Social Security Contributions and Benefits Act 1992.