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Coronavirus: HMRC to publish company car tax guidance

Cars parked in a car park

HMRC says it will publish official company car tax guidance to reflect clarification given to Fleet News in light of the coronavirus lockdown.    

Many businesses provide company cars to employees who have been either furloughed or restricted to staying at home and only undertaking essential travel.

In many cases their company car will be parked outside unused and some employers are even looking to SORN the vehicle as some will have no road tax, MOT or insurance during the ‘lockdown’ period.

Currently, unless a company car is unavailable for 30 consecutive days, and is available to the same employee before and after the period of unavailability, it is liable to benefit-in-kind (BIK) tax during the whole period.

HMRC told Fleet News that the benefit charge applies where a car is made available for private use, whether or not it is so used. 

For example, the spokesman said: “A car kept on an employee’s driveway during a period of furlough would still be considered to be made available. Neither would we accept a SORN declaration as proof of unavailability.

“Ordinarily, we would expect that the car is handed back to the employer so that it cannot be used. However, we recognise that under the current circumstances it may not be possible to hand the car itself back, we would accept that where all the keys (or tabs) are in possession of the employer, and the employee does not have the authority to request the keys are returned to them, the car would be unavailable.”

However, fleet decision-makers have contacted Fleet News saying local tax officials were unaware of measures to allow the handing back of a company car during lockdown.  

HMRC has now confirmed that official guidance will be updated soon to reflect the coronavirus changes.  

The Association of Fleet Professionals (AFP) says that handing back of company car and van keys or fobs to employers in order to avoid BIK taxation during the coronavirus lockdown needs careful management.

“During lockdown, there are many people facing potential hardship and being able to avoid benefit-in-kind could make a genuine difference to some," said AFP co-chair Caroline Sandall. "While it has been established in principle with HMRC that key handback is a definite option, there are some points on which we remain unclear.

“The main immediate problem that needs to be avoided is employees simply pushing their keys back through the letterboxes of unattended offices, something of which we have heard several reports. For your employer and HMRC, this doesn’t create an audit trail showing when the key was returned or to who, which is something that may need to be ultimately established to the satisfaction of either or both. 

“It also creates a possible fleet management problem for the future. If you run a single or limited badge fleet, you could find yourself with a pile of identical keys and no means of working out how to link them to a particular vehicle. Plus, there is quite a high probability that keys will be lost and replacing them is always expensive.”

Sandall says that there also needed to be questions considered about where company cars were being left while they are being unused.

“There is a health and safety issue here," continued Sandall. "Clearly, no employee should be leaving their car or van on the road if they don’t have the keys because they may need to move it in an emergency. Even if it is parked on their drive, they may still require urgent access.

“If the vehicle is being parked or stored elsewhere, then security becomes a concern, as does its ongoing condition. There is certainly an argument for the car or van to be properly inspected before it is accepted as being handed back, and that regular checks afterwards are needed.

“Finally, if the crisis situation persists for some months, as seems not unlikely, then you should consider the usual issues surrounding long-term vehicle storage, from flat batteries to seized brakes. All of these matters should be examined by fleet managers.”

The AFP has been discussing the issue of company car tax during the lockdown with interested parties.“While we definitely believe that employers should be facilitating key handback for those who want to take that option, it is a subject that requires careful management and potentially, further guidance from HMRC, including questions around related areas such as benefit-in-kind on fuel," said Sandall.

“Certainly, it would be useful to be having a dialogue with HMRC to make certain matters clear so that compliant procedures can be established by fleets. We’re happy to act as the lead body on this subject in conversations with the authorities. However, we are also sensitive to the fact that the authorities have more important matters to which they are attending.”

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  • Keith Wall - 07/04/2020 12:02

    I think company car drivers tend to be more affluent than many and should not expect a reduction in benefit in kind during the crisis. Everyone else has to continue to bear vehicle costs and the government is not there to finance every small loss but to shield us from catastrophe. Try looking out and not in, don't behave like a professional footballer.

    • Sage & Onion - 07/04/2020 12:56

      I can't agree. You might find that the less "affluent" company car drivers on the lower rungs of company car choice lists pay higher BIK tax for their diesel repmobile than executive company car drivers higher up the ladder and they get much less private use too. People with cars on private finance agreements can ask for payment holidays etc so why shouldn't the same relief apply to company car drivers? We're all in this together remember.

  • Glenn Ewen - 09/04/2020 16:34

    As a fleet manager, the thought of having cars all over the country, with the keys in one location, for an unspecified period of time, and with no-one responsible for them fills me with dread. The safety and security issues are endless. The minute that the lockdown is ended, every one of those drivers is going to want their car back on the road, having taken absolutely no interest in it for the previous months, and they'll expect it to start first time. Who will they hand the car back to? Who will check it before they get back into it to make sure it is safe? Will they move it periodically to prevent flat spots on the tyres? Will they be able to chock it and ;leave the handbrake off to prevent seizure? Who will sign the car back over to them? Clearly an idea thought out by someone who has absolutely no experience of how real life is? Simple solution would be to allow a certain weekly mileage to ensure that the vehicle was kept roadworthy, and the battery charged, and reducing the BIK accordingly to reflect that. If they can pay a huge swathe of the country whilst they are furloughed, they can come up with a simple solution to keep the driver involved in the upkeep of the vehicle, and have the ability to go straight back to work without swamping the breakdown services on the first day back?

  • moon - 09/04/2020 18:54

    Nonsense, most company cars are probably the 2nd cars in the household so following your logic they should pay for a company car they cannot use and their personal family car. Benefit in kind should be paid only on a benefit that is an actual benefit.

  • Stuart Daglish - 28/04/2020 11:31

    I have a company car plus fuel benefit. I am part time and visit customers all over the uk. I have underlying health issues, three heart attacks, heart bypass and diabetic 2. My car has been parked up on my drive since 16th March and will be for a further 6 weeks. This will bring the total to at least 3 months. I currently pay £350/per month extra for this privilege of the car and fuel, whilst I am furloughed surely this cannot be right.

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