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HMRC internal manual

National Insurance Manual

Class 1A National Insurance contributions: Liability for Class 1A NICs before 6 April 2000: Cars provided by third parties

The rules about who is liable to pay Class 1A NICs on benefits, including car and fuel benefits, provided by third parties changed on the 6 April 2000.

NIM16035 provides guidance on who is liable to pay Class 1A NICs on benefits, including car and car fuel benefits, from 6 April 2000.

Section 10 SSCBA 1991For tax years up to and including 1999/2000, where a car

  • was made available for the private use of an employee or director, or
  • members of the director’s or employee’s family or household, by someone other than the employer, the person liable to pay Class 1A NICs was the person liable to pay secondary Class 1 NICs on that employee or director’s earnings.

Example

A civil servant is seconded to an outside employer but continues to receive their salary from the original employing department. The outside employer provides a car for private use. As the liable secondary contributor, the original employing department is liable for Class 1A NICs on the car provided and not the outside employer who is treated as a third party.