Class 1 NICs: Expenses and allowances: HMRC Dispensations: Background
But as a result of an early 1990’s Department of Social Security/Inland Revenue (now HMRC) review into the definitions of earnings for PAYE tax and NICs purposes, Ministers agreed that employers could take account of dispensations in deciding whether a NICs liability arises on reimbursed home telephone expenses. This change took effect from April 1993.
In 1994, the use of dispensations by employers for NICs purposes was extended to other expenses payments. On 30 November 1994, the Secretary of State for Social Security confirmed that employers are allowed to take account of any dispensation in deciding whether NICs are due on expenses payments they make to employees.