NIM05847 - 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: Establishing the
facts
Introduction
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. Sometimes you will
have to establish facts and examine those facts to determine
whether the payments are for the employee’s use of a
qualifying vehicle.
Employee car ownership schemes
If you are dealing with an employee car ownership scheme (ECOS),
see EIM31500, there may be several payments made to or for the
benefit of an employee. You will need to consider each payment to
determine if it is RME.
The facts
Below is a list of facts you should try to establish, but it is
not meant to be exhaustive. Wherever possible try to get documents
that evidence the facts. Establish
- how the employer calculates the amount
they pay
- whether the payments are in kind or not
– if in kind, such payments are not RME and Class 1A NICs may
be due, see
NIM13020
- whether the employer reviews the amounts
they pay and if they do
- what factors are considered
- the outcome of reviews, i.e. determine if the
amounts are increased, decreased, remained unchanged, and why
- how often the amounts are reviewed
- the terms and conditions under which the
employer makes payments
- if the employer pays different amounts to
different employees, establish what factors the employer uses to
determine who gets what
- if the employer keeps business mileage
records extract data to compare the business mileage undertaken by
employees who get the same amounts paid by the employer
- what happens to the payments when
employees are promoted into a job where
- they will not undertake any business travel
- their business travel is likely to reduce or
increase significantly
- what happens to the payments when an
employee is absent from work due to illness or maternity leave
- if payment is suspended, when is it suspended and
for how long
- if payment is withdrawn completely, when and under
what circumstances
- establish what conditions the employer
imposes before payments are made
- does the employer require that the employee must
be expected to undertake some business travel, if yes, is there a
minimum amount
- does the employer check that the employee has a
valid driving licence
- does the employer impose any conditions which
restrict the type of car the employee must drive; if yes, what are
they. Typically, an employer might require that the car is less
than a specified age and or has done less than a specified
mileage.
Documents
The types of documents that might contain some or all of these
facts include
- staff handbooks
- car policy documents
- car handbooks/guidance
- correspondence issued to employees when
they are awarded an allowance
- correspondence issued to employees when
they are promoted
- correspondence issued to employees when
they are absent from work due to illness
- employment contracts.
This list is not meant to be exhaustive, merely indicative of
some of the documents you are likely to come across.
