NIM05845 - Class 1 NICs: Expenses and allowances: Motoring expenses (including mileage allowances) paid on or after 6.4.02: Determining whether payments are for an employee’s use of a qualifying vehicle: Background
To disregard some or the entire qualifying amount (QA) (see
NIM05830) from earnings, the employer
must make payments to or for the benefit of an employee which are
relevant motoring expenditure (RME) (see
NIM05815). For Class 1 NICs purposes,
the employer can only deduct QA from RME, not other earnings.
Mileage allowance payments (MAPs, see EIM31205) are exempt
from PAYE income tax. The employer, therefore, does not have to
include the excess in gross pay for PAYE tax purposes. See
EIM31235.
To determine whether payments are RME may involve trying to
establish whether the payments are made for the employee’s
use of a qualifying vehicle. See EIM31255. If the
payments are not for the employee’s use of a qualifying
vehicle, they are not RME and are unlikely to be MAPs. If the
payments are not RME the employer must include the payments in
gross pay for Class 1 NICs. If the payments are not MAPs the
employer must include the payments in gross pay for PAYE income
tax.
See
