NIM16176 – Class 1A NICs: Special Class 1A NICs cases: Fuel for use in a provided car - General

General rule

The general rule for NICs is that whatever method of provision is used by an employer to supply fuel for use by an employee a Class 1 NICs liability will arise on the cost of that fuel, if

• the fuel is used for private purposes
• the fuel is used for business purposes but 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

This general rule applies equally 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 special rules in Chapter 6 of Part 3 ITEPA 2003. Although a Class 1 NICs liability arises, this general rule is modified where the fuel is supplied for use in a car which attracts a car benefit charge under section 120 ITEPA 2003 and the fuel provided attracts a fuel scale charge under section 149 ITEPA 2003, see NIM16177 onwards.

Exceptions to the general rule

• The only exceptions to this general Class 1NICs rule is where the fuel is provided:
• direct from the employer’s own fuel pump

Fuel provided from an employer’s own fuel pump is a payment in kind for NICs purposes and disregarded from Class 1 NICs, see NIM06052. Fuel provided is this manner attracts a Class 1A NICs liability.

• the employee purchases the fuel on behalf of his employer, see NIM06054.

Fuel purchased on behalf of the employer and then used by the employee privately is a payment in kind for NICs purposes and disregarded from Class 1 NICs. Fuel provided in this manner attracts a Class 1A NICs liability. Purchases on behalf of the employer can be made by cash, credit card, garage account or fuel agency card.