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Guys, please explain why when national insurance contributions are calculated to salary we must add mileage allowance ???
Example from June 2013 session:
(1) John is aged 59 and is employed by Surf plc as a sales director. During the tax year 2012–13, he was paid gross
director’s remuneration of £184,000.
(3) During the period 6 April to 31 October 2012, John used his private motor car for both private and business
journeys. He was reimbursed by Surf plc at the rate of 60p per mile for the following mileage:
Miles
Normal daily travel between home and Surf plc’s offices 1,180
Travel between Surf plc’s offices and the premises of Surf plc’s clients 4,270
Travel between home and the premises of Surf plc’s clients (none of the clients’ premises
were located near the offices of Surf plc) 510
–––––– Total mileage reimbursed by Surf plc 5,960––––––Class 1 NIC’s are payable on cash payments made to the employee which will of course include salary, bonus or commission payments, but as the mileage allowance is also a cash payment made by the employer to the employee any assessable benefit thereon will also be be chargeable to class 1 NIC’s. Any non cash benefits will only be chargeable to Class 1A NIC’s paid only by the employer.
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