NI on car allowance

[levers]

I got promoted into a grade that entitles me to a car allowance. I don't get a car as such, and the allowance is a percentage of my salary so I get it in my payslip as cash and it seems to be taxed and NI'd as per normal salary. I'm not surprised it is taxed, but is it right that is also subject to NI?
If so, what exactly is the purpose or advantage of calling it a separate car allowance, if it is just the same as extra salary? Couldn't they just have given me a salary increase of the same amount?

[MrPAYE]

Yes, NI is correct. Cash is cash is cash - in other words it is treated the same as salary for both tax and NI.

Two main reasons why companies keep it separate from salary:

1) Usually the car allowance is NOT pensionable, i.e. your employer doesn't need to contribute a % of the allowance into your company pension scheme

2) There is no obligation to increase the allowance whenever salary is increased.

[section 44]

Cash is cash is cash.

Couldn't agree more. I would gladly work for free if I could receive "expenses" to cover my mortgage, household bills, kids and savings.

[jogreen68]

I had the same situation, companies pay cash as a car allowance as an alternative to a company car as it is more efficient for them to do so, but like others have said you quickly find out cash is cash and the car allowance is treate just as your income or bonus would be.

[moorsidemark]

My company pays for my car service (I own the vehicle) I have to use the car for work purposes and the service cost is paid through monthly expenses. I am taxed on this benefit (P11d) but my employer now says this expense must, in future, be paid through payroll and I must pay NI too - all the info I have read on HMRC website suggests that only Class 1a NI is payable (by employer) and there is no mention of an employee having to pay Class 1 NI contributions - any advice please?