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HMRC internal manual

National Insurance Manual

Class 1A National Insurance contributions: Special Class 1A NICs cases: Vans: Motoring expenses (excluding fuel) connected with a provided van: From 6 April 2003

Paragraph 7 Part 8 Schedule 3 SSCR 2001 as amended by the Social Security (Contributions, Categorisation of Earners and Intermediaries) (Amendment) Regulations 2004 SI 2004 No 770

The income tax position from 6 April 2003With effect from 6 April 2003, ITEPA 2003 replaced parts of ICTA 1988. Sections 157(3) (relates to cars) and 159AA(3) (relates to vans) of ICTA 1988 were amalgamated into section 239 of ITEPA 2003. This means that where an employee is taxed under section 154 ITEPA 2003 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 239(1) and 239(2) of ITEPA 2003. For guidance see EIM22710.

The NICs position from 6 April 2003Paragraph 7 Part 8 Schedule 3 to the SSCR 2001 was amended to reflect the changes described above. It disregards from earnings, payments of motoring expenses to, or on behalf of, an employee incurred in connection with a car or van but do not give rise to a tax liability in addition to the tax payable under section 154 ITEPA 2003 (van benefit charge). This means that Class 1 NICs liability cannot arise on any payments for motoring expenses, for example cash reimbursements, non-cash vouchers, payments by credit or debit card, etc.

Types of motoring expenseAlthough it is not possible to supply a definitive list of the types of motoring expenses included within section 239(1) or (2) of ITEPA 2003, 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 it will be necessary to check whether the expenses are excluded from an additional tax charge by virtue of section 239(1) or (2) of ITEPA 2003. Where there is no additional tax liability, there is no Class 1 NICs liability. Where, however, there is an additional tax liability, Class 1 NICs will be due on any payment which is not a specific and distinct business expense, see


Provision of fuelSee

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