Employees who, because of the nature of their employment, have a security enhanced company car, are to be given benefit-in-kind tax relief on the cost of fitting potentially life-saving features.

The tax move, which is contained in the 2012 Finance Bill published following this year’s spring Budget and now making its way through Parliament, follows the April 2011 abolition of the £80,000 cap on company car list prices for the purpose of benefit-in-kind tax.

The Government says that the measure is being introduced so that an estimated up to 100 employees will not be financially penalised as a consequence of the removal of the price cap.

The relief, which is backdated to April 6, 2011, is confined, says HM Revenue and Customs (HMRC) to employees ‘who can demonstrate that the nature of their employment creates a threat to their personal security’.

The legislative amendment will be contained within Part 3 (Chapter 6) of the Income Tax (Earnings and Pensions) Act 2003 which deals with ‘taxable benefits: cars, vans and related benefits’.

Security enhances that will be excluded from company car benefit-in-kind tax calculations are:

• Armour designed to protect a car’s occupants from explosions or gunfire
• Bullet-resistant glass
• Any modifications to a car’s fuel tank designed to protect the tank’s contents from explosions or gunfire (including by making the tank self-sealing)
• Any modification made to the car in consequence of anything which is a relevant security feature by virtue of the above three examples.

Employees most likely to be impacted by the legislation change are senior public sector employees, for example members of the police and the armed forces, and some people employed in the private sector, such as the pharmaceutical industry, animal test laboratories and, says HMRC, some journalists.

Among the most popular cars that are available with additional security enhancements are the BMW X5 and 7 Series, the Jaguar XJ, Land Rover Range Rover and Discovery 4 as well as some Lexus and Mercedes-Benz models.

HMRC says that the tax amendment relating to security enhanced cars supports the Government’s objective of a ‘fair tax system’. It adds: “Following removal of the cap, including the cost of certain security enhancements could make the taxable benefit disproportionately expensive.”

For company car benefit-in-kind purposes the cash equivalent of the benefit of the vehicle is used to calculate the amount of tax due, including the price of any accessories costing more than £100.

However, the list of excluded accessories already includes:

• Equipment provided for use in the performance of employment duties
• Equipment to enable a disabled person to use a car
• A mobile telephone.