HMRC adds pay-at-pump and EV-charging examples to NIC manual

HMRC has added two worked examples to its National Insurance manual page on goods and services purchased by directors and employees (NIM02194)GOV, covering pay-at-pump fuel and public electric-vehicle chargingGOVGOV. The additions extend the manual's worked examples to self-service terminals and employer corporate apps: everything turns on whose contract it is, not on how the bill is settledGOV.

Example 5 deals with an employee who stops at a self-service petrol station and puts the employer's credit card into the pay-at-pump machine. Because there are no staff, it will be difficult to establish whether the employee can meet the litany — the settled declaration that the employee contracts as the employer's agent. But if the machine receives the employer's details as the account holder, so the garage understands through the pump that it is contracting with the employer before the contract is formed, the employee forms the contract as the employer's agentGOV and Class 1A NICs is dueGOV. If the machine receives only the employee's details, the employee contracts on their own behalfGOV and Class 1 NICs is due on the fuel used privatelyGOV.

Example 6 deals with an employee who uses a public EV charging point and pays through the employer's corporate account in a mobile-phone app the employer has set up for its employees. Where the app records the employer as the account holder and that is communicated to the charging point before charging starts, the contract is between the charging provider and the employer, with the employee acting as agentGOV — so Class 1A NICs is due on the charge the employee uses privatelyGOV. Where the app records the employee as the account holder, the contract is with the employeeGOV and Class 1 NICs is dueGOV. The example adds that the same principles apply when an app is used to buy fuel at a petrol station.

The examples illustrate the general rule in NIM02192 — that a director or employee buying goods is normally assumed to be buying on their own account and personally liable to pay in the first instanceGOVGOV — and the authorised-agent exception in NIM02193: an employee authorised to contract for the employer, who makes that agency clear in advance, leaves the employer holding the liability to payGOV, so there is no Class 1 liability however the bill is settledGOV, and any subsequent transfer of the goods to the employee is a payment in kind outside Class 1, chargeable instead to Class 1A. Conversely, where the employer merely discharges the employee's own debt, as in the page's earlier holiday, furniture and health-farm examples, the payment is earnings and Class 1 NICs appliesGOVGOV. The page's pointers to the earnings-period guidance and to the specific-and-distinct business-expense exclusion are unchanged.

Whether Class 1A or Class 1 NICs applies to private fuel and charging therefore depends on whether the terminal or app records the employer or the employee as the account holder.GOV Legal basis: regulation 25 of, and Schedule 3 to, the Social Security (Contributions) Regulations 2001 (Part II paragraph 1, payments in kind; Part VIII paragraph 9, specific and distinct expenses), and NIM02192 to NIM02194.