NIM05725 | Class 1 NICs: Expenses and allowances: Mileage allowances: Rules before 6 April 2002: Employer restricts the amount of business mileage paid

Under the qualifying business travel rules introduced from 6 April 1998 and which apply until 5 April 2002, all reasonable business travel expenses incurred are excluded from NICs, in line with the equivalent income tax treatment. This includes payments for business mileage. The question of NICs liability only arises if an employer does more than reimburse the employee the actual business expense incurred, see NIM05708.

Guidance on qualifying business travel is included at NIM06240.

Some employers restrict the amount of business mileage that they can pay to their employees under the new qualifying travel rules. This normally occurs where an employer requires an employee to deduct from his business mileage his normal home to office mileage.

Where this occurs, the full amount of the qualifying business mileage that could have been paid can be taken into account in determining whether there is a NICs liability on the mileage rate paid, see NIM05730 for examples.

Employers are not compelled to use the additional mileage that they could have paid under the qualifying travel rules in their calculations.