NIM06380 - Class 1 NICs: Expenses and allowances: Travelling expenses: Workers on offshore oil and gas rigs and platforms

Changes in legislation from 6 April 2004

With effect from 6 April 2004 the Social Security (Contributions) Regulations 2001 were amended in recognition of the coming into force of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003).

Although ITEPA 2003 did not change the meaning of existing tax law, the opportunity was taken, as part of the tax law rewrite commitment, to provide legislative support for tax exceptions previously provided under cover of extra statutory concessions.

Legislative cover for those items excepted from income tax by virtue of ESC A65 (Workers on offshore oil and gas rigs or platforms: free transfers from or to mainland) can now befound at section 305 ITEPA 2003 (Offshore oil and gas workers: mainland transfers).

As a consequence the NICs legislation was amended with effect from 6 April 2004 so as to reflect the new ITEPA 2003 provision. The NICs exceptions are now contained at paragraph 6(b) of Part V and paragraph 6 of Part VIII of Schedule 3. The NIC provisions disregard from earnings:

  • a non cash voucher which can be used to obtain travel etc. to or from an offshore oil or gas platform, the provision of which would be exempt from tax under section 305 ITEPA 2003
  • a payment made in respect of travel etc. to or from an offshore oil or gas platform which is not charged to tax by virtue of section 305 ITEPA 2003.

The changes ensure full tax and NICs alignment on the treatment of travel and subsistence payments (including vouchers) for mainland transfers in respect of offshore oil and gas workers.

See EIM34110 for general guidance on section 305 ITEPA 2003.

Payments in Kind

Although Class 1A NICs were extended to cover most benefits in kind from 6 April 2000,there is no liability for Class 1A NICs on any payment in kind which satisfies the conditions for tax exemption in section 305 ITEPA 2003. This is in keeping with the general exclusion from Class 1A NICs of any benefit which is not charged to tax as general earnings. (See NIM13000 for guidance on the general principles regarding liability for Class 1A NICs.)