NIM16177 - Class 1A National Insurance contributions: Special Class 1A NICs cases: Fuel for use in a provided car: Liability for Class 1A NICs

Regulation 25 and paragraph 7D of Part 8 of Schedule 3 to the Social Security Contributions Regulations 2001 (SSCR 2001) (SI2001 No 1004)

Where fuel is provided for use in a car which attracts a car benefit charge under the rules in Chapter 6 of Part 3 ITEPA 2003, an income tax charge arises on the fuel under section 149 ITEPA 2003 unless:

  • the director or employee is required to make good the cost of all private fuel and does so; or
  • the fuel is available for business travel only.

Where income tax liability does not arise on the fuel, there can be no Class 1A NICs liability because there are no general earnings chargeable to income tax under ITEPA 2003 see NIM13070.

Paragraph 7D provides a statutory exemption from Class 1 NICs liability where fuel is provided for use in a car which attracts a car benefit charge from 6 April 2002.

Before 6 April 2002, applying the law strictly, there may be Class 1 NICs liability on fuel purchased for use in a car which attracts a car benefit charge. The Class 1 NICs liability was administratively disregarded in favour of a Class 1A NICs liability. (This content has been withheld because of exemptions in the Freedom of Information Act 2000)

Employee makes good cost of private fuel after Class 1A NICs are due

If an employee makes good the cost of all private fuel after the Class 1A NICs is due to be paid to HMRC, that is 19 July (or 22 July if payment is by an approved electronic method), Class 1A NICs liability arises on the cash equivalent of the car fuel benefit without taking the amount made good into account. For guidance about the income tax position where an employee makes good late, see EIM25500.

Calculating the amount of Class 1A NICs due

The amount of Class 1A NICs due on fuel provided for use in a car which attracts a car benefit charge is calculated using the fuel benefit scale rates applied for tax purposes under section 149 ITEPA 2003. Guidance on calculating fuel benefits is contained at EIM25500.

Where an employer pays a mileage allowance see NIM16178 or round sum allowance see NIM16179.