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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: Determining whether payments are for an employee’s use of a qualifying vehicle: Establishing the facts


To determine whether payments are RME may involve trying to establish whether thepayments are made for the employee’s use of a qualifying vehicle.Sometimes you will have to establish facts and examine those facts to determine whetherthe payments are for the employee’s use of a qualifying vehicle.

Employee car ownership schemes

If you are dealing with an employee car ownership scheme (ECOS), see EIM31500, theremay be several payments made to or for the benefit of an employee. You will need toconsider each payment to determine if it is RME.

The facts

Below is a list of facts you should try to establish, but it is not meant to beexhaustive. Wherever possible try to get documents that evidence the facts. Establish

  • how the employer calculates the amount they pay
  • whether the payments are in kind or not – if in kind, such payments are not RME and Class 1A NICs may be due, see NIM13020
  • whether the employer reviews the amounts they pay and if they do



  • what factors are considered
  • the outcome of reviews, i.e. determine if the amounts are increased, decreased, remained unchanged, and why
  • how often the amounts are reviewed


  • the terms and conditions under which the employer makes payments
  • if the employer pays different amounts to different employees, establish what factors the employer uses to determine who gets what
  • if the employer keeps business mileage records extract data to compare the business mileage undertaken by employees who get the same amounts paid by the employer
  • what happens to the payments when employees are promoted into a job where



  • they will not undertake any business travel
  • their business travel is likely to reduce or increase significantly


  • what happens to the payments when an employee is absent from work due to illness or maternity leave



  • if payment is suspended, when is it suspended and for how long
  • if payment is withdrawn completely, when and under what circumstances


  • establish what conditions the employer imposes before payments are made



  • does the employer require that the employee must be expected to undertake some business travel, if yes, is there a minimum amount
  • does the employer check that the employee has a valid driving licence
  • does the employer impose any conditions which restrict the type of car the employee must drive; if yes, what are they. Typically, an employer might require that the car is less than a specified age and or has done less than a specified mileage.


The types of documents that might contain some or all of these facts include

  • staff handbooks
  • car policy documents
  • car handbooks/guidance
  • correspondence issued to employees when they are awarded an allowance
  • correspondence issued to employees when they are promoted
  • correspondence issued to employees when they are absent from work due to illness
  • employment contracts.

This list is not meant to be exhaustive, merely indicative of some of the documents youare likely to come across.