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NIM05837 | Class 1 NICs: Expenses and Allowances: Motoring Expenses (including mileage allowances) paid on or after 6 April 2002: Employer restricts the amount of business mileage paid

From HM Revenue & Customs · National Insurance Manual

Employer does not pay a mileage allowance for every mile of business travel – Position from 6 April 2002

Introduction

Some employers restrict the amount of business mileage that they pay to their employees. This normally occurs where an employer requires the employee to deduct from the business mileage any normal home to office mileage. Accordingly, some employers do not pay a mileage allowance covering all qualifying business travel.

Full guidance on what is qualifying business travel is included in NIM06240 onwards.

The provisions within the NICs motoring expenses scheme

The NICs motoring expenses scheme provides, subject to all the conditions at regulation 22A(4) of the Social Security (Contributions) Regulations 2001, that the qualifying amount (QA) is calculated by reference to the number of miles of business travel undertaken

  • for which payment has been made; and

  • for which no payment has previously been or is to be made.

Therefore, within the NICs motoring expenses scheme the QA is calculated by reference to the full amount of qualifying business mileage. That is regardless of the fact the employer may not pay a mileage allowance to cover some of that qualifying business mileage. For an example see NIM05841.

The legislation requires that business miles for which no payment is to be made in future must be included in QA in the earnings period in which they were driven. They cannot be carried forward to a future earnings period.

If an employee is not required to report business mileage the employer does not pay, the employer will not know the total business mileage that could be used when calculating the QA. In these circumstances, the employer can only calculate the QA using the business mileage they pay the employee. For more information about the number of business miles travelled, to be used in the calculation for the QA, see NIM05831.