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HMRC internal manual

National Insurance Manual

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HM Revenue & Customs
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Class 1A National Insurance contributions: Special Class 1A NICs cases: Cars provided for private use: Cars provided to disabled drivers: Cars provided for private use other than home to work travel

Section 10(9) SSCBA and regulation 37 SS(C)R 2001; regulations 2, 8, 36 and Schedule 1 of the Social Security (Contributions, Categorisation of Earners and Intermediaries) (Amendment) regulations 2004 (SI 2004 No 770)Where a car is provided to a disabled driver to assist in travelling between home and their place of employment and no other private use is permitted or takes place, there is no Class 1A NICs liability, see

NIM16022.

If other private use is permitted, Class 1A NICs liability arises but special rules apply to the home to work mileage undertaken by the disabled driver. These rules apply to tax years up to and including the 2001/2002 tax year only.

Normally, home to work travel is private mileage, see NIM16002 and SE23080, and is not included in any calculation of the business mileage undertaken by an employee who is provided with a car for the purposes of calculating the car benefit charge under section of 157 ICTA 1988. This rule was modified for disabled drivers.

Where a car is provided to a disabled driver for private use, any mileage undertaken by the disabled driver in travelling between their home and place of employment is treated as business mileage if, by including it, the car benefit charge is reduced.

Example

* A disabled driver has unlimited private use of an employer provided car.
* The normal annual business mileage recorded was 2,000 miles.
* The employee’s home to work annual mileage is 3,000 miles.
* For the purposes of calculating the car benefit charge for Class 1A NICs purposes, the employee’s total business mileage is taken as 5,000 miles.Regulation 37 could not apply to cars provided in tax years from 2002/03 because the car benefit charge was not linked to the business miles travelled. From 6 April 2002, the car benefit charge is calculated by multiplying the ‘price of the car’ by the ‘appropriate percentage’ based on the car’s carbon dioxide (CO2) emissions, see SE23350 for the 2002/03 year and EIM23350 for later years. Regulation 37 was revoked with effect from 6 April 2004.

For the definition of disabled driver see NIM16025.

Income taxThe NICs rules differ from the tax treatment of cars provided to disabled employees. The tax rules are explained at EIM23600 (before 6 April 2003 - SE23600).