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HMRC internal manual

National Insurance Manual

Class 1 NICs: Expenses and allowances: Motoring expenses (including mileage allowances) paid on or after 6.4.02: The qualifying amount - definition

Purpose of the term ‘the qualifying amount’ and the formula by which it iscalculated: Regulation 22A(4) of the Social security (Contributions) Regulations 2001– Applies from 6 April 2002

Purpose of the qualifying amount

The qualifying amount (QA) is the maximum amount that an employer can pay to anemployee, who uses a privately owned vehicle, in respect of motoring expenses withoutincurring a Class 1 NICs liability. Any amount of relevant motoring expenditure (RME) (NIM05815), paid in excess of the QA for the earnings period, mustbe added to any other earnings paid in the same earnings period that RME payments aremade.

The formula used to calculate the qualifying amount

The QA is calculated by multiplying the number of business miles travelled by theemployee by the appropriate approved mileage rate. For more information about

  • calculating the business miles travelled see NIM05832
  • the approved mileage rate see NIM05833.