NIM16170 – Class 1A NICs: Special Class 1A NICs cases: Fuel for use in a privately owned car

Where an employer provides free fuel to employees for use in their privately owned cars and the fuel is provided as a “benefit” rather than by a cash payment, reimbursement or voucher, a Class 1A NICs liability will arise if:

• the fuel is used for private purposes
• the employee does not reimburse the employer the cost of the fuel, see NIM15200
• the cost of the fuel is chargeable on the earner to Schedule E income tax as an emolument.

The most common method of supplying fuel as a benefit will be direct from an employer’s own fuel pump but see NIM06052 onwards for information on alternative methods of providing fuel which will also attract a Class 1A NICs liability.

The amount of Class 1A NICs due is calculated on the cash equivalent of the fuel calculated for tax purposes.

If an employee purchases fuel on behalf of his employer by using the ‘litany’ at the point of purchase, see NIM06054.