NIM16173 - Class 1A National
Insurance contributions: Special Class 1A NICs cases: Fuel for use
in a privately owned car: Liability for Class 1 NICs
Provision of fuel not by a payment in kind
Where an employer provides fuel by means of something which is
not a payment in kind (see NIM02020), Class 1 NICs liability arises
on the cost of that fuel, if the fuel is used for
- private purposes
- business purposes where the actual cost of
the business expense is less than the amount the employee
receives.
Common methods of meeting fuel costs are shown at
NIM06052. If provision of fuel is made
by means of a non-cash voucher Class 1 NICs liability arises.
This rule applies to fuel provided for use in
- a privately owned car, see
NIM06050 onwards, and
- a provided car which attracts a car
benefit charge under the rules in Chapter 6 of Part 3 ITEPA 2003
(before 6 April 2003 – section 157 ICTA 1988).
For periods before 6 April 2002, where
- fuel is provided for use in a car which
attracts a car benefit charge under section 157 of ICTA 1988;
and
- the provision of fuel is not by way of a
payment in kind
HMRC administratively disregards payments in respect of fuel
from earnings so that Class 1 NICs liability does not arise.
Regulation 7(2) of the Social Security
(Contributions) (Amendment No. 2)Regulations 2002 (SI 2002 No 307) and
paragraph 7D of Part 8 of Schedule 3 tothe SS(C)R 2001
From 6 April 2002, where fuel is provided for a car chargeable
to income tax under section 158 of ICTA 1988 (car fuel benefit, see
SE23750), Class 1 NICs liability cannot arise because any payments
by way of the provision of fuel are disregarded from earnings when
calculating Class 1 NICs.
Provision of fuel by a payment in kind
Where
- an employer provides fuel for use in a car
which attracts a car benefit charge under section 120 of ITEPA 2003
(before 6 April 2003 – section 157 of ICTA 1988); and
- that fuel is provided by way of a payment
in kind (excluding non-cash vouchers), for example
- fuel provided direct from the employer’s own
fuel pump; or
- the employee purchases the fuel on behalf of his
employer, see
NIM06054. (purchases on behalf of the
employer may be made by cash, credit card, garage account, cheque
or fuel agency card)
payments in kind are disregarded from earnings so that no Class
1 NICs are due (see NIM02020). See
NIM16171 about Class 1A NICs
liability.
