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(a) "the principal Regulations" means the Social Security (Contributions) Regulations 2001[3]; and

(b) except where the context otherwise requires - 


(i) a reference to a numbered regulation is a reference to the regulation of the principal Regulations bearing that number; and

(ii) a reference to a numbered Schedule is a reference to the Schedule to the principal Regulations bearing that number.

Amendment of the principal Regulations
     2. Amend the principal Regulations as follows.

     3. In regulation 1(2) after the definition of "the Board" insert - 

" "business travel" has the meaning given in paragraph 2 of Schedule 12AA to the Taxes Act[4];"

     4.  - (1) Amend regulation 22 (payments to be treated as earnings) as follows.

    (2) In paragraph (1) for "(2) to (4)" substitute "(2) to (5)".

    (3) After paragraph (4) insert - 

    " (5) The amount specified in his paragraph is the amount equal to the cash equivalent, in respect of car fuel, which is chargeable to tax under Schedule E by virtue of section 158 of the Taxes Act[5].".

     5. After regulation 22 insert - 

" Amounts to be treated as earnings in connection with the use of qualifying vehicles other than cycles
     22A.  - (1) To the extent that it would not otherwise be earnings, the amount specified in paragraph (2) shall be so treated.

    (2) The amount is that produced by the formula - 



RME - QA

Here - 
RME is the aggregate of relevant motoring expenditure within the meaning of paragraph (3) in the earnings period; and
QA is the qualifying amount calculated in accordance with paragraph (4).

    (3) A payment is relevant motoring expenditure if - 



(a) it is a mileage allowance payment within the meaning of section 197AD(2) of the Taxes Act[6];

(b) it would be such a payment but for the fact that it is paid to another for the benefit of the employee; or

(c) it is any other form of payment, except a payment in kind, made by or on behalf of the employer, and made to, or for the benefit of, the employee in respect of the use by the employee of a qualifying vehicle.



Here "qualifying vehicle" has the same meaning as in Schedule 12AA to the Taxes Act, but does not include a cycle within the meaning of section 192(1) of the Road Traffic Act 1988[7].

    (4) The qualifying amount is the product of the formula - 



M × R

Here - 
M is the sum of - 
(a) the number of miles of business travel undertaken, at or before the time when the payment is made - 


(i) in respect of which the payment is made, and

(ii) in respect of which no other payment has been made; and



(b) the number of miles of business travel undertaken - 



(i) since the last payment of relevant motoring expenditure was made, or, if there has been no such payment, since the employment began, and

(ii) for which no payment has been, or is to be, made; and



R is the rate applicable to the vehicle in question, at the time when the payment is made, in accordance with paragraph 4(2) of Schedule 12AA to the Taxes Act and, if more than one rate is applicable to the class of vehicle in question, is the higher or highest of those rates.".

     6. In Part V of Schedule 3 (payments to be disregarded in the calculation of earnings for the purpose of earnings-related contributions: non-cash vouchers to be disregarded as payments in kind) for paragraph 1(2) substitute - 

    " (2) A non-cash voucher may also be disregarded - 


(a) by virtue of paragraph 7D of Part VIII (car fuel); or

(b) in the circumstances specified in paragraph 4 of Part X (payments by way of incidental expenses).".

     7.  - (1) Amend Part VIII of Schedule 3 (payments to be disregarded in the calculation of earnings for the purposes of earnings-related contributions: travelling, relocation and other expenses and allowances of the employment) as follows.

    (2) After paragraph 7 insert - 

" Qualifying amounts of relevant motoring expenditure
     7A. To the extent that it would otherwise be earnings, the qualifying amount calculated in accordance with regulation 22A(4).

Qualifying amounts of mileage allowance payment in respect of cycles
     7B.  - (1) To the extent that it would otherwise be earnings, the qualifying amount of a mileage allowance payment in respect of a cycle.

    (2) The qualifying amount is that which would be produced by the formula in regulation 22A(4) if the value for R were the rate for the time being approved under paragraph 4(2) of Schedule 12AA to the Taxes Act in respect of a cycle.

    (3) In this paragraph - 


"cycle" has the meaning given in section 192(1) of the Road Traffic Act 1988; and
"mileage allowance payment" has the meaning given in section 197AD(2) of the Taxes Act.

Qualifying amounts of passenger payment
     7C.  - (1) To the extent that it would otherwise be earnings, the qualifying amount of a passenger payment.

    (2) The qualifying amount is that which would be produced by the formula in regulation 22A(4) if - 



(a) references to business travel were to business travel for which the employee carries a qualifying passenger; and

(b) the value for R were the rate for the time being approved for a passenger payment under paragraph 5 of Schedule 12AA to the Taxes Act.



    (3) In this paragraph - 



"passenger payment" has the meaning given in section 197AE(2) of the Taxes Act[8]; and
"qualifying passenger" has the same meaning as it has in paragraph 5(3) of Schedule 12AA to the Taxes Act.

Car fuel
     7D.  - (1) A payment by way of the provision of car fuel in circumstances where an amount is chargeable to income tax under Schedule E, in respect of its provision, under section 158 of the Taxes Act.

    (2) Subsection (3) of section 158 of the Taxes Act applies for the construction of the reference to car fuel in sub-paragraph (1) as it applies for the construction of that section.".

    (3) Amend paragraph 9 (specific and distinct expenses) as follows - 

(a) renumber the existing paragraph 9 as sub-paragraph (1) of that paragraph;

(b) at the end of sub-paragraph (1) add - 

" This is subject to the following qualification."; and

(c) after sub-paragraph (1) add - 

    " (2) Sub-paragraph (1) does not authorise the disregard of any amount by way of relevant motoring expenditure, within the meaning of paragraph (3) of regulation 22A, in excess of that permitted by the formula in paragraph (4) of that regulation."

Nick Ainger

Tony McNulty
Two of the Lords Commissioners of Her Majesty's Treasury

13th February 2002



The Secretary of State hereby concurs.



Signed by authority of the Secretary of State


Malcolm Wicks
Parliamentary Under-Secretary of State, Department for Work and Pensions

11th February 2002



The Department for Social Development hereby concurs.



Sealed with the Official Seal of the Department for Social Development on


31st January 2002

L.S.

John O'Neil
Senior Officer of the Department for Social Development

[2] 1992 c. 7. Section 3(2) was amended by paragraph 4 of Schedule 3 to the Social Security Contributions (Transfer of Functions, etc.) (Northern Ireland) Order 1999 (S.I. 1999/671) ("the Transfer Order"). Section 4(6) was substituted by section 78(3) of the Child Support, Pensions and Social Security Act 2000 and subsection (7) was inserted by paragraph 5 of Schedule 3 to the Transfer Order. The functions of the Department of Health and Social Services for Northern Ireland under the Social Security Contributions and Benefits (Northern Ireland) Act 1992 were transferred to the Department for Social Development by Article 8(b) of, and Part II of Schedule 6 to, the Departments (Transfer and Assignment of Functions) Order (Northern Ireland) 1999 (S.I. 1999 No. 481).back

[3] S.I. 2001/1004. Relevant amendments are those made by S.I. 2001/2412.back

[4] Schedule 12AA was inserted by Schedule 12 to the Finance Act 2001 (c. 9).back

[5] Section 158 was amended by section 53(2)(b) of the Finance Act 1989 (c. 26), section 53 of the Finance (No. 2) Act 1992 (c. 48), paragraphs 1, 6(2) and 7 of Schedule 3 to the Finance Act 1993 (c. 34), paragraph 22 of Schedule 3 to the Vehicle Excise and Registration Act 1994 (c. 22), section 43(2) and (4) of the Finance Act 1995 (c. 4) and S.I. 2001/635.back

[6] Section 197AD was inserted by section 57(1) of the Finance Act 2001.back

[7] 1988 c. 52. There are amendments to section 192 which are not relevant for the purposes of this instrument.back

[8] Section 197AE was inserted by section 57(1) of the Finance Act 2001.back

  Prepared 22 March 2002