NIM16030 - Class 1A National Insurance contributions: Special Class 1A cases: Cars provided for private use: Cars provided to family or household members

Sections 148 and 169 of Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003).

A benefit provided for a member of an employee’s family or household, whether by his employer or someone else, is chargeable to income tax under ITEPA 2003 if it is provided by reason of his employment.

As with other benefits which attract Class 1A NICs liability, the provision of a car for the private use of an employee’s or director’s family or household is treated in the same manner as it is for tax.

Where a tax liability arises on a car provided to a member of an employee’s or director’s family or household, an equivalent Class 1A NICs liability arises on the employer.

Detailed guidance on the tax treatment of cars provided to family members is provided at EIM23550 to EIM23570 . That guidance applies equally to Class 1A NICs.

Shared use by family or household member

As there is now a statutory basis for calculating the amount of general earnings chargeable to income tax under ITEPA 2003, in respect of shared cars provided to a member of the employee’s or director’s family or household, Class 1A NICs are due on the earnings adjusted in accordance with sections 148 or 169 of ITEPA 2003. Guidance on the application of these sections is at EIM23550 to EIM23570.