NIM05818 | Class 1 NICs: Expenses and allowances: Motoring expenses (including mileage allowances) paid on or after 6 April 2002: Relevant motoring expenditure - one-off lump sum payments

Payments that are not relevant motoring expenditure: one-off lump sum payments –Applies from 6 April 2002

Some employers may decide to make a one-off lump sum payment to or on behalf of an employee. The employer may assert that the lump sum is aimed at reimbursing their employees for the business proportion of the standing costs of the car. Providing the facts show that the payments are paid for the use, or potential, or anticipated use, of the employee’s privately owned car vehicle, lump sums such as these will fall within the definition of relevant motoring expenditure (RME).

Care should be taken to ensure any lump sum paid is in recognition of the use, or potential, or anticipated use, of the car. Lump sums paid for any other reason, for example sums in recognition of an employee surrendering entitlement to a company car or in respect of ownership, are not RME.

Do not automatically accept that, because an employee incurs costs using their car for business travel, a regular lump sum payment paid by the employer is RME. You should examine the facts to establish the true nature of the payment. For more information about determining whether regular lump sum payments are RME see NIM05845 to NIM05849.