NIM05819 - Class 1 NICs: Expenses and allowances: Motoring expenses (including mileage allowances) paid on or after 6 April 2002: Relevant motoring expenditure - payments using credit cards or fuel agency cards
Payments that are relevant motoring expenditure: payments using credit cards or fuel agency cards – applies from 6 April 2002
Some employees use credit cards and/or fuel agency cards to pay for fuel and the credit card or fuel agency card bill is subsequently met by the employer. On occasions, other expenses connected with the car might be met in this way, for example, repairs and replacement parts. Providing payments are paid in recognition of the use, or potential, or anticipated use, of an employee’s privately owned car, all such payments fall within the definition of relevant motoring expenditure (RME).
The date of payment is the date the employee uses the credit or fuel agency card, if they know at the outset that they are not required to make good the costs incurred.
However, where an employee
- is authorised to buy goods or pay for services as their employer’s agent; and
- makes it clear in advance of a payment that they are acting as such an agent (see NIM02193),
the purchases are made on behalf of the employer and the fuel or services the employee receives are a payment in kind. Payments in kind are not RME. Class 1A NICs may be due,see NIM13000.
Example 1 – Fuel agency card used: Payments are RME
Facts
Employee uses own car for business travel.
The employer provides the employee with a fuel agency card to enable him to purchase all his fuel for both private and business travel.
The employee is not required to pay for any fuel.
The employer pays the card bills every month.
There is no evidence to show that when the employee uses the card, that he is authorised to do so as his employer’s agent.
Calculating RME
When calculating RME, for every purchase, the employer should add the cost of the purchases made in the earnings period to any other RME paid (for example, a mileage allowance payment) in the same earnings period. The date of payment is the date the employee used the fuel agency card, not the date the employer paid the card bill.
Calculating earnings
If the total RME exceeds the qualifying amount (QA) (see NIM05830), the difference must be added to any other earnings paid in the same earnings period.
Example 2 – Fuel agency card used: Payments are not RME
Facts
Employee uses own car for business travel.
The employer provides the employee with a fuel agency card to enable him to purchase all his fuel for both private and business travel.
The employee is not required to pay for any fuel.
The employer’s motoring expenses policy makes it clear that employees provided with fuel agency cards
The employer pays the card bills every month.
Class 1A NICs liability
In these circumstances, what the employee gets is a payment in kind. Payments in kindare not RME. The employer should return the cost of the purchases on form P11D and pay Class 1A NICs if the Class 1A conditions are satisfied, see NIM13020.
Income tax position
This is one of the differences between the NICs motoring expenses scheme and the income tax statutory scheme. For income tax purposes, payments made by credit card and/or fuel agency cards are not mileage allowance payments, see EIM31210, so must be returned on form P11D in the normal way.
- are authorised to buy fuel as their employer’s agent, and
- must make it clear in advance of using the card that they are acting as such an agent.