Where an employer’s mileage rate for business mileage for
periods to 5 April 2002 is greater than the “up to 4,000
miles” Inland Revenue Authorised Mileage Rate (AMR), the
profit will normally attract a Class 1 NICs liability, see
NIM05715.
Exceptionally, however, an employer may pay a rate above the
AMR and argue that he has evidence to support that the mileage rate
he pays is an accurate reflection of the business expenses actually
incurred by his employees in using their privately owned cars.
Where this is alleged, check the evidence that the employer
provides, bearing in mind the expenses rule contained in paragraph
3 and 9 of Part 8 of Schedule 3 to the 2001 Regulations, see
NIM05020. If it is accepted that the
mileage rate does no more than reimburse the employee the specific
and distinct business expense incurred, there will be no NICs
liability on any part of the employer’s mileage rate. These
cases will be rare.
(This text has been withheld because of exemptions in the
Freedom of Information Act 2000)
