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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: Vans: Motoring expenses (excluding fuel) connected with a provided van: Before 6 April 2003

Class 1A NICs liability before 6 April 2003Where a van was provided for private use before 6 April 2003, Class 1A NICs are payable on the cash equivalent of the van, i.e. the amount of emoluments chargeable to income tax under Schedule E. See

NIM16381 for further guidance. No further Class 1A NICs are due on any payments or benefits, whether fuel or some other motoring expense.

Tax treatment of motoring expenses connected with a provided van before 6 April 2003The payment by an employer of motoring expenses to, or on behalf of, an employee which are incurred in connection with a van, are exempt from income tax if there is a charge to income tax under section 159AA ICTA 1988, (van benefit charge) see SE22130. An exception to this is the cost of a driver provided while the van is used privately, section 155(1) ICTA 1988, see SE23007.

This means that where an employee is taxed under section 159AA ICTA 1988 on the provision of a van, no further tax is charged if any payments are made to or for the employee’s benefit for motoring expenses incurred in connection with that van. The relevant tax legislation is section 159AA(3) ICTA 1988. For guidance see SE22130.

Class 1 NICs treatment of motoring expenses (excluding fuel) connected with a provided van before 6 April 2003For NICs purposes, before 6 April 2003, there was no NICs legislation in force to mirror the income tax legislation to exclude these additional motoring expenses from earnings liable for Class 1 NICs. Therefore, Class 1 NICs liability can arise in addition to any Class 1A NICs that are also payable on the provision of the van. Should Class 1 NICs liability arise HMRC administratively ignores the liability to align the NICs position with the tax position. This is the position regardless of the method of payment used, for example, credit/debit cards, agency cards, non-cash vouchers, cash, etc. This administrative easement does not apply to payments for fuel, see

NIM16385.

Types of motoring expenseAlthough it is not possible to supply a definitive list of the types of motoring expenses included within section 159AA(3) ICTA 1988, the following are included

  • servicing and/or maintenance costs, including replacements
  • road tax
  • insurance costs
  • fees/subscriptions to a motoring organisation.Although the above are typical of the type of expenses which are likely to arise, there may be occasions where other types of expenses are paid. Where this happens check whether the expenses are excluded from an additional tax charge under section section 159AA(3) ICTA 1988. Where there is no additional tax liability, administratively ignore any Class 1 NICs that are due. Where there is an additional tax liability, Class 1 NICs will be due on any expense which is not a specific and distinct business expense, see

NIM05020.

Provision of fuelSee

NIM16385 for guidance about the NICs position on the provision of fuel for provided vans.