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HMRC internal manual

National Insurance Manual

HM Revenue & Customs
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Class 1 NICs: Expenses and allowances: Civic dignitaries’ and Councillors’ allowances: Councillors’ household expenses

Where a councillor is reimbursed for additional household expenses (heating, lighting, etc.) which are incurred in relation to carrying out the duties of their employment at home, the amounts involved will be disregarded when calculating NICs.

From 6 April 2003, in line with the tax treatment of the reimbursement of such additional costs incurred under homeworking arrangements, up to £2 per week can be disregarded without the councillor being required to provide evidence of the additional costs. This rate applied throughout the period to 5 April 2008.

From 6 April 2008 to 5 April 2012 the rate was increased for both tax and NIC purposes to £3 a week.

From 6 April 2012 the rate was increased for both tax and NIC purposes to £4 a week / £18 a month.

In the event that a higher figure is reimbursed, the councillor will have to prove that the higher figure has actually been incurred, or that it is a reasonable estimate of additional costs, before the amount can be disregarded.

See NIM05648 for general guidance regarding the treatment of expenses reimbursed to councillors.