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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: Employer restricts the amount of business mileage paid

Employer does not pay a mileage allowance for every mile of business travel –Position from 6 April 2002


Some employers restrict the amount of business mileage that they pay to theiremployees. This normally occurs where an employer requires the employee to deduct from thebusiness mileage any normal home to office mileage. Accordingly, some employers do not paya mileage allowance covering all qualifying business travel.

Full guidance on what is qualifying business travel is included in NIM06240onwards.

The provisions within the NICs motoring expenses scheme

The NICs motoring expenses scheme provides, subject to all the conditions at regulation22A(4) of the SS(C)R 2001, that the qualifying amount (QA) is calculated by reference tothe number of miles of business travel undertaken

  • for which payment has been made; and
  • for which no payment has previously been or is to be made.

Therefore, within the NICs motoring expenses scheme the QA is calculated by referenceto the full amount of qualifying business mileage. That is regardless of the fact theemployer may not pay a mileage allowance to cover some of that qualifying businessmileage. For an example see NIM05841.

The legislation requires that business miles for which no payment is to be made in futuremust be included in QA in the earnings period in which they were driven. They cannot becarried forward to a future earnings period.

If an employee is not required to report business mileage the employer does not pay, theemployer will not know the total business mileage that could be used when calculating theQA. In these circumstances, the employer can only calculate the QA using the businessmileage they pay the employee. For more information about the number of business milestravelled, to be used in the calculation for the QA, see NIM05831.