Some employers may decide to make a one-off lump sum payment to
or on behalf of an employee. The employer may assert that the lump
sum is aimed at reimbursing their employees for the business
proportion of the standing costs of the car. Providing the facts
show that the payments are paid for the use of the employee’s
privately owned car vehicle, lump sums such as these will fall
within the definition of relevant motoring expenditure (RME).
Care should be taken to ensure any lump sum paid is in
recognition of the use of the car. Lump sums paid for any other
reason, for example sums in recognition of an employee surrendering
entitlement to a company car or in respect of ownership, are not
RME.
Do not automatically accept that, because an employee incurs
costs using their car for business travel, a regular lump sum
payment paid by the employer is RME. You should examine the facts
to establish the true nature of the payment. For more information
about determining whether regular lump sum payments are RME see
NIM05845 to
NIM05849.
