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HMRC internal manual

National Insurance Manual

Class 1A National Insurance contributions: Special Class 1A cases: Cars provided for private use: Shared use by family or household member

Regulation 33 SS(C)R 2001 and regulations 2, 6, 36 and Schedule 1 of the Social Security (Contributions, Categorisation of Earners and Intermediaries) (Amendment) regulations 2004 (SI 2004 No 770)

Position before 6 April 2003ESC A71 (company cars: family members and shared cars) provides a concession to the normal rules about the tax treatment of cars provided to family members. The equivalent rule for Class 1A NICs purposes is contained in regulation 33 of the SS(C)R 2001.

ESC A71 removes a car benefit charge under the family member rules for a car provided to a family member, if

  • the family member is already subject to a car benefit charge on that car; or
  • the conditions set down in the middle part of ESC A71 are satisfied. Detailed guidance on the conditions which must be satisfied to allow ESC A71 to operate is provided at SE23070.

Materially, there is no difference in the application of regulation 33 for Class 1A NICs and ESC A71 for tax. The conditions which must be satisfied to allow this family member concession to operate for tax purposes apply equally to regulation 33 for Class 1A NICs.

The main difference, however, is that for Class 1A purposes, this concession is a substantive rule within the legislation covering Class 1A NICs. This means that there is a right of appeal against any decision not to apply regulation 33.

Position from 6 April 2003ESCA71 became obsolete with effect from 6 April 2003 when it was incorporated into sections 148 and 169 of ITEPA 2003. Guidance on the application of these sections is in EIM23520 and EIM23070. Regulation 33 of the SS(C)R 2001 was repealed with effect from 6 April 2004.

Because there is now a statutory basis for calculating the amount of general earnings chargeable to income tax under ITEPA 2003, in respect of shared cars provided to a member of the employee’s or director’s family or household, Class 1A NICs are due on the earnings adjusted in accordance with sections 148 or 169 of ITEPA 2003.