NIM05718 | Class 1 NICs: Expenses and allowances: Mileage allowances: Rules before 6 April 2002: Rates paid are greater than authorised rates - employer claims no profit included

Where an employer’s mileage rate for business mileage for periods to 5 April 2002 was greater than the “up to 4,000 miles” HMRC Authorised Mileage Rate (AMR), the profit would normally have attracted a Class 1 NICs liability, see NIM05715.

Exceptionally, however, an employer may have paid a rate above the AMR and argued that they had evidence to support that the mileage rate they paid was an accurate reflection of the business expenses actually incurred by their employees in using their privately owned cars.

Where this was alleged, we would have checked the evidence that the employer provided, considering the expenses rule contained in paragraph 3 and 9 of Part 8 of Schedule 3 to the 2001 Regulations, see NIM05020. If it was accepted that the mileage rate did no more than reimburse the employee the specific and distinct business expense incurred, there would have been no NICs liability on any part of the employer’s mileage rate.