HMRC update - National Insurance & car allowances
Following a call on 1 November between the Mazars’ Employment Tax team and HMRC’s national policy contact, we set out below some key insights we thought were worth sharing with you, building on our previous article and FAQs.
If you are an employer that has paid qualifying car allowances to colleagues and reimbursed them for business mileage below the Approved Mileage Allowance Payment (AMAP) rate of 45p per mile, a refund can be claimed on the Class 1 NICs (both Primary and Secondary) paid on car allowances where they qualify as Relevant Motoring Expense in the last six years. Additionally, there will also be a refund on any Apprenticeship Levy charge paid and interest on the amounts due.
In our call, HMRC have outlined two preferred options for employers submitting claims.
No advance clearance is required from HMRC before filing claims, however, HMRC may conduct reviews post-submission to check on the validity.
Therefore, submitting an explanatory protective application in advance of the claim offers maximum transparency and strengthens the basis of the claim, as well as will help protect for as long a period as possible where it might take some time to collect the relevant data required to accurately request/process the NIC reclaim.
When filing for a refund via RTI, HMRC have stated that it is necessary to submit an FPS amendment individually for each of the past six years under consideration. However, rather than correcting every single pay period within those years, we understand that a single adjustment at the tax year end suffices based on the compiled evidence.
If you think this may apply to your business, Mazars can help you:
To get this process started you can complete our online calculator here. By completing this we will be able to give you a high-level NIC Reclaim calculation for the past 6 years and our Employment Tax team will have a call with you for an initial consultation at no charge.
The Employment Tax team here at Mazars can aid you with preparing and submitting a robust NIC refund claim– if you are interested or would like further information, please do not hesitate to contact us below, or refer to our website which contains further guidance including FAQs from our clients.
Additionally, if you think this may apply to your business, you can complete our quick online form here. By completing this we will be able to give you a high level NIC Reclaim calculation and our Employment tax team will come back to you for an initial consultation at no charge.
Following a recent tribunal case involving HMRC, it was found that car allowances can be treated as relevant motoring expenditure. This means many businesses could now be due a refund of NIC from HMRC for previous tax years.
After a recent NIC reclaim tribunal was found in favour of the taxpayer, we are advising businesses on whether they too could be reclaiming NIC on car allowances.
The Low Pay Commission (LPC) estimates that around 1.6 million workers were being paid at or below the minimum wage in April 2022 – that’s 5% of all UK workers. However, with the minimum wage rates increasing and pay differentials reducing, combined with the complexities of the minimum wage legislation, it’s not just those low paying roles at risk anymore.
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