National Insurance contributions on car allowance payments to employees are refundable

The taxpayers - two separate and unrelated companies - each operated car allowance schemes with employees able to choose a company car or a car allowance. Payments to employees under the scheme were liable to income tax and National Insurance the employers claimed repayment of class 1 National Insurance for employees with business mileage. HMRC refused the claims.

The First-tier Tribunal dismissed Laing’s appeal but allowed Willmott’s.

Laing and HMRC appealed to the Upper Tribunal which heard the appeals together because they raised similar issues.

The Upper Tribunal said reg 22A(3)(c) of the Social Security (Contributions) Regulations SI 2001/1004 captured a payment by an employer which was ‘broadly in respect of the use by an employee of a vehicle’. It was not limited to reimbursement of expenses for actual use and could extend to payments in respect of future use irrespective of whether the employee bore the cost of that...