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HMRC internal manual

National Insurance Manual

Class 1A National Insurance contributions: Special Class 1A NICs cases: Fuel for use in a provided car: Payment of a round sum allowance

If an employer pays a round sum allowance (RSA) in respect of fuel used in a provided car, the normal rules for assessing Class 1 NICs on RSAs apply, see NIM06160.

The following tables show the NICs position where a RSA is paid in respect of fuel for use in a provided car.

Employer pays a round sum allowance for NICs liability
   
Business mileage only and the rate is reasonable No NICs liability – No fuel benefit charge arises under section 149 of ITEPA 2003 (before 6 April 2003 – section 158 of ICTA 1988). Section 10(1)(a) of SSCBA 1992 not satisfied so no Class 1A NICs due, see NIM13070. Paragraph 9 Part 8 Schedule 3 SS(C)R 2001 satisfied so no Class 1 NICs due, see NIM05020.
Business mileage only but the rate paid is excessive Class 1 NICs due on the profit. No Class 1A NICs due on the round sum allowance, whether or not a fuel benefit charge arises under section 149 of ITEPA 2003 (before 6 April 2003 – section 158 of ICTA 1988). Profit element is earnings under section 3(1)(a) SSCBA 1992, see NIM02010.
Amount for business expenses disregarded from earnings by paragraph 9 Part 8 Schedule 3 SS(C)R 2001, see NIM05020. Section 10(1)(c) SSCBA 1992 is not satisfied, see NIM13090.    
  Non-business mileage Class 1 NICs due on full amount. No Class 1A NICs due whether or not fuel benefit charge arises under section 149 of ITEPA 2003 (before 6 April 2003 – section 158 ICTA 1988). All of rates are profit so are earnings under section 3(1)(a) SSCBA 1992, see NIM02010. Section 10(1)(c) SSCBA 1992 is not satisfied, see NIM13090.