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The Contributions Agency has introduced a number of changes affecting the way National Insurance contributions (NIC...
The Contributions Agency has introduced a number of changes affecting the way National Insurance contributions (NICS) are calculated on company cars and fuel. The Agency has also deferred the adoption of the Inland Revenue's Fixed Profit Car Scheme, (FPCS) rates for car mileage allowances.


The Alternative Payment Method (APM) for Class 1A contributions is now available to all employers, irrespective of the number of cars they provide for their employees' private use. Under the APM employers can pay their Class 1A contributions direct to the Contributions Agency.

Employers interested in using the APM should complete the application form in the 1994/95 Employers Pack. Application forms should reach the Agency no later than 5 April 1994.

For further information employers should contact Class 1A Group, Contributions Agency, Room D1805, Newcastle upon Tyne NE98 1YX, Tel (06451) 55176 (Calls charged at local BT rates)


From 30 November 1993, the 50% reduction on Class 1A NICs on the fuel scale charge when business travel reached 18,000 miles has been abolished. This change brings the NIC position into line with the Inland Revenue, which altered its rules for Income Tax on 6 April 1993.

Class 1A NICs including the 50% reduction which were correctly paid before 30 November 1993 will stand.

No reduction, pro rata or otherwise can be made in respect of Class 1A NICs for the 1993/94 tax year which are paid on or after 30 November 1993.


From 6 April 1994, National Insurance due on cars provided for private use will be calculated using a new system based on the list price of the car. The current scale charges based on the engine size and market value will be abolished.

This follows changes in the Tax Rules for the 1994/95 tax year. Class 1A NICs on fuel provided for private use will continue to be calculated using scale charges.


The Contributions Agency has deferred the adoption of mileage rates from the Inland Revenue's Fixed Profit Car Scheme (FPCS). The FPCS rates were to be used to calculate National Insurance contributions on any element of profit from employee's car mileage allowances. In April 1993, the Agency announced its plans to move from motoring associations' rates to the Inland Revenue's FPCS rates from April 1994.

It has since been decided to defer the plans in light of suggestions contained in a report, published on 6 October 1993, by the Tax and NICs Working Group.

Peter Lilley, Secretary of State for Social Security set up the Working Group to look at ways in which the rules for National Insurance and Income Tax could be aligned. The Agency felt it would be inappropriate to adopt the FPCS rates before decisions are reached on the Working Group's proposals.

Further consultation on the Working Group's suggestions is to be carried out next year. Until a final decision is made, employers should continue to use the rates recommended by motoring associations.

Detailed guidance on the Class 1A changes will be issued in the 1994 edition of leaflet CA 33 (NI280) - Cars and Fuel, contained in the 1994/95 Employers Pack.

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