NIM16070 - Class 1A NICs: Special Class 1A NICs cases: Cars provided for private use: More than one car provided: Special rules for tax years up to 2001/2002

Regulation 34, SS(C)R 2001

Special rules apply to the calculation of Class 1A NICs where two or more cars are made available concurrently for private use in tax years up to and including the 2001/2002 tax year.

Two or more cars provided concurrently

These special rules apply if two or more cars are concurrently provided for private use because of:

• any one employed earner’s employment
• two or more employed earner’s employments under the same employer; or
• two or more employed earner’s employments under different employers who are associated.

General rule

Where two or more cars are provided under any of the circumstances described above, Class 1A NICs are calculated on the cash equivalent of each car using the normal tax rules. This means that the available reductions for business travel which apply to the first and second car under paragraph 4 of Schedule 6 ICTA 1988, see SE23324, apply equally to Class 1A NIC calculations.

Special rule

Where two or more cars are provided under any other circumstances, Class 1A NICs are calculated by ignoring paragraph 4 of Schedule 6 ICTA 1988. This means that where an employee is provided with two or more cars from wholly separate employments, each employer is liable for Class 1A NICs for the car they provide using the normal business mileage reductions for each car.

Employers treated in association

For the purposes of these rules, two or more employers are treated as associated if:

• they are carrying on business in association; or
• one employer has control of the other or others, or any person has control of both or all of them.

Except in relation to an employer which is a partnership, the term control means, in relation to an employer which is a body corporate, the power to secure that the affairs of the employer are conducted in accordance with the wishes of the person concerned. The power being exercisable by:

• means of the holding of shares or the possession of voting rights in, or in relation to, that employer, or
• virtue of any powers conferred by the articles of association or other document regulating that or any other employer.

In relation to an employer which is a partnership, ‘control’ means having the right to a share of more than one-half of the assets, or of more than one-half of the income, of the partnership.