NIM16385 - Class 1A NICs: Special Class 1A NICs cases: Vans and van fuel: Fuel for use in a provided van

Where a van is provided for private use by a director or employee within Part V Chapter II ICTA 1988 the cash equivalent of the van is calculated by reference to the scale charge used to determine the cash equivalent of the benefit for tax purposes, see SE22050. Class 1A NICs are payable by the employer on the provision of the van, using the same scale charges.

For tax there is no additional tax charge for any fuel provided for use in a van which attracts a van scale charge. This applies whether or not the fuel is used for private mileage. For NICs however, a liability for Class 1 NICs will arise on any fuel purchased by the employee for use in a provided van if:

• the fuel is used for private travel,
• the fuel is used for business travel but the amount paid or reimbursed by the employer exceeds the actual cost of the business travel.

Any payments in respect of fuel made by an employer which attracts a Class 1 NICs liability are added to any other earnings received by the employee in the earnings period in which the fuel payment is made and Class 1NICs deducted.

If the fuel is provided by means of a benefit, for example from an employer’s own fuel pump, no Class 1 NICs liability will arise and, in the absence of any additional tax liability, no additional Class 1A NICs will be due on the fuel.

Where an employee uses the litany in advance of purchasing fuel for use in an employer provided van, no Class 1 NICs liability will arise and, again, in the absence of any additional tax charge, no Class 1A NICs will be due.