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HMRC internal manual

National Insurance Manual

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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 - payments using credit cards or fuel agency cards

Payments that are relevant motoring expenditure: payments using credit cards or fuelagency cards – applies from 6 April 2002

Some employees use credit cards and/or fuel agency cards to pay for fuel and the creditcard or fuel agency card bill is subsequently met by the employer. On occasions, otherexpenses connected with the car might be met in this way, for example, repairs andreplacement parts. Providing payments are paid in recognition of the use ofan employee’s privately owned car, all such payments fall within the definition ofrelevant motoring expenditure (RME).

The date of payment is the date the employee uses the credit or fuel agency card, if theyknow at the outset that they are not required to make good the costs incurred.

However, where an employee

  • is authorised to buy goods or pay for services as their employer’s agent; and
  • makes it clear in advance of a payment that they are acting as such an agent (see NIM02193),

the purchases are made on behalf of the employer and the fuel or services the employeereceives are a payment in kind. Payments in kind are not RME. Class 1A NICs may be due,see NIM13000.

Example 1 – Fuel agency card used: Payments are RME

Facts

Employee uses own car for business travel.

The employer provides the employee with a fuel agency card to enable him to purchase all his fuel for both private and business travel.

The employee is not required to pay for any fuel.

The employer pays the card bills every month.

There is no evidence to show that when the employee uses the card, that he is authorised to do so as his employer’s agent.

Calculating RME

When calculating RME, for every purchase, the employer should add the cost of the purchases made in the earnings period to any other RME paid (for example, a mileage allowance payment) in the same earnings period. The date of payment is the date the employee used the fuel agency card, not the date the employer paid the card bill.

Calculating earnings

If the total RME exceeds the qualifying amount (QA) (see NIM05830),the difference must be added to any other earnings paid in the same earnings period.

Example 2 – Fuel agency card used: Payments are not RME

Facts

Employee uses own car for business travel.

The employer provides the employee with a fuel agency card to enable him to purchase all his fuel for both private and business travel.

The employee is not required to pay for any fuel.

The employer’s motoring expenses policy makes it clear that employees provided with fuel agency cards

  • are authorised to buy fuel as their employer’s agent, and
  • must make it clear in advance of using the card that they are acting as such an agent.

The employer pays the card bills every month.

Class 1A NICs liability

In these circumstances, what the employee gets is a payment in kind. Payments in kindare not RME. The employer should return the cost of the purchases on form P11D and payClass 1A NICs if the Class 1A conditions are satisfied, see NIM13020.

Income tax position

This is one of the differences between the NICs motoring expenses scheme and the incometax statutory scheme. For income tax purposes, payments made by credit card and/or fuelagency cards are not mileage allowance payments, see EIM31210, so must be returned on formP11D in the normal way.