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HMRC internal manual

National Insurance Manual

Class 1A National Insurance contributions: Liability for Class 1A NICs before 6 April 2000: Special arrangements for fuel provided for private use in a provided car: Dual liability for Class 1 and Class 1A NICs: General

When Class 1A NICs were first introduced in April 1991 to extend the National Insurance (NI) base to include company cars and fuel, the tax rules for determining the value of these benefits were adopted as the basis of assessment.

NI legislation covering Class 1A NICs for the period 6 April 1991 to 5 April 2000 mirrored, as closely as possible, tax legislation and, in part, referred directly to the relevant sections of the Income and Corporation Taxes Act 1988 (ICTA 1988) covering car and fuel benefits.

This meant that where

  • a car was chargeable to tax under section 157 of ICTA 1988 (see SE23002) a Class 1A liability arose on the provision of the car; and
  • fuel provided for use in that car was chargeable to tax under section 158 of ICTA 1988 (see SE23750) a Class 1A NICs liability also arose on that fuel.Whilst the Class 1A NICs legislation was being prepared, the High Court gave judgment in R v Department of Social Security ex parte Overdrive Credit Card (1991), which is referred to commonly as the Overdrive case. This case was a judicial review of guidance issued by the DSS on the treatment of fuel for NI purposes. Guidance on the general effect on NI of the Overdrive case is given at


Amongst other things, the Overdrive judgment confirmed that even after Class 1A NICs were introduced, there remained a Class 1 NIC liability on fuel provided to an employee, irrespective of whether the fuel was also subject to a Class 1A NICs as a result of a section 158 fuel benefit charge arising.

As it was never the intention, when introducing Class 1A NICs, to arrive at a situation where a dual Class 1 and Class 1A NICs liability existed on the provision of the same fuel, an administrative decision was taken not to collect the Class 1 NICs due.

No attempt should be made to enforce collection of any Class 1 NICs liability on fuel provided for use in a car subject to a car benefit charge under section 157 ICTA 1988 for tax years 1991/1992 to 1999/2000. The only exception to this is where the fuel was provided by means of: