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HMRC internal manual

National Insurance Manual

From
HM Revenue & Customs
Updated
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Class 1A National Insurance contributions: Liability for Class 1A NICs before 6 April 2000: Conditions giving rise to a Class 1A NICs liability

Section 10 SSCBA 1992From 6 April 1991 to 5 April 2000 liability to pay Class 1A NICs arose on

  • cars made available for the private use of:

    • most directors
    • employees earning at a rate of £8,500 per year
  • cars made available for the private use of members of the family or household of the above
  • fuel made available for private use in those cars but

    • see NIM17554 where the fuel was provided to a director who received no other earnings
    • see NIM17520 where the fuel was purchased by the employee and the cost later reimbursed by the employer.Before a Class 1A NICs liability could arise
  • the benefit of the car had to be chargeable to income tax under section 157 ICTA 1988
  • the benefit of the fuel had to be chargeable to income tax under section 158 ICTA 1988
  • the employment by reason of which the car was made available had to be employed earner’s employment.If a car benefit charge under section 157 ICTA 1988 did not arise, no Class 1A NICs were payable, irrespective of whether a charge to income tax could be raised under an alternative ICTA section, for example under section 154 and 156(5) of ICTA 1988 (assets placed at the employee’s disposal).

Guidance on the conditions that need to be met for a car benefit charge to arise is provided at SE23000 onwards. That guidance applies equally to calculating the car benefit for Class 1A NIC purposes and is relevant for periods both before and after 6 April 2000.