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hello sir,
hope you are doing well!actually in this question i understand that we have to do class 1 and class 1a for employer but the mileage allowance they are doing is excess.
isnt it like
comapny paid 0.5*12000=6000
HMRC 0.45*10000 +0.25*2000 =5000
so benefit is 1000
but in answer they took 12000*(0.5-0.45)=600
itll be helpful if you explain where i am wrong>QUESTION :
Bob is an employee of Dibbit Ltd, and is paid an annual salary of £50,000. He makes
contributions of £3,000 into the company’s occupational pension scheme each year.
In the tax year 2019/20 he drove 12,000 business miles in his own car for which he was paid
50p per mile by Dibbit Ltd.
How much employer’s class 1 NICs is Dibbit Ltd required to pay in respect of Bob for the
tax year 2019/20?ANSWER:
£5,792
Class 1 employer’s NICs £
(£50,600 – £8,632) × 13.8% 5,792
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Working: Earnings liable to class 1 NIC
£
Salary 50,000
Excess mileage allowance (12,000 × (50p – 45p)) 600
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50,600What you have computed is the employment income assessment where the authorised rates differ below and above 10,000 miles – however what you have been asked to calculate is the employers class 1 NIC for which purpose we only include the excess payment above 45p per mile – it does NOT change at 10,000 miles.
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