NIM16386 - Class 1A National Insurance contributions: Special Class 1A NICs cases: Vans: Fuel for use in a provided van: Before 6 April 2005

Section 10(1) of the Social Security Contributions and Benefits Act 1992 (SSCBA 1992)

Class 1A NICs liability and Income tax position on vans before 6 April 2005

Where a van was provided to an employee chargeable to income tax under section 154 of ITEPA 2003, providing all the conditions in section 10(1) of the SSCBA 1992 are satisfied (see NIM13021), Class 1A NICs are due on the cash equivalent of the van. The cash equivalent of the van is the amount of general earnings chargeable to income tax under ITEPA 2003.

There is no additional tax charge for any fuel provided for use in a van chargeable to income tax under the van benefit rules. This applies whether or not the fuel is used for private mileage. Therefore, no Class 1A NICs liability can arise on the provision of fuel.

Class 1 NICs liability before 6 April 2005

A liability for Class 1 NICs arises on any payment made to or for the employee’s benefit for fuel which is used in a provided van if:

• the fuel is used for private travel, or
• the fuel is used for business travel but the amount paid or reimbursed by the employer exceeds the actual cost of the business travel

and the payment is not a payment in kind, for example, fuel from an employer’s pump.

Any payments in respect of fuel made by an employer, which attracts a Class 1 NICs liability, are added to any other earnings received by the employee in the earnings period in which the fuel payment is made and Class 1 NICs deducted.

Where an employee uses the litany in advance of purchasing fuel for use in an employer provided van, no Class 1 NICs or Class 1A NICs will be due. For guidance about the litany see NIM02191.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)