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HMRC internal manual

National Insurance Manual

HM Revenue & Customs
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Class 1 NICs: Expenses and allowances: Motoring expenses (including mileage allowances) paid on or after 6.4.02: Relevant motoring expenditure - one-off lump sum payments

Payments that are not relevant motoring expenditure: one-off lump sum payments –Applies from 6 April 2002

Some employers may decide to make a one-off lump sum payment to or on behalf of anemployee. The employer may assert that the lump sum is aimed at reimbursing theiremployees for the business proportion of the standing costs of the car. Providing thefacts show that the payments are paid for the use of the employee’s privately ownedcar vehicle, lump sums such as these will fall within the definition of relevant motoringexpenditure (RME).

Care should be taken to ensure any lump sum paid is in recognition of the use of the car.Lump sums paid for any other reason, for example sums in recognition of an employeesurrendering entitlement to a company car or in respect of ownership, are not RME.

Do not automatically accept that, because an employee incurs costs using their car forbusiness travel, a regular lump sum payment paid by the employer is RME. You shouldexamine the facts to establish the true nature of the payment. For more information aboutdetermining whether regular lump sum payments are RME see NIM05845 toNIM05849.