Personnel Today
  • Home
    • All PT content
    • Advertise
  • Email sign-up
  • Topics
    • HR Practice
    • Employee relations
    • Equality, diversity and inclusion
    • Learning & training
    • Pay & benefits
    • Wellbeing
    • Recruitment & retention
    • HR strategy
    • HR Tech
    • The HR profession
    • Global
    • All HR topics
  • Legal
    • Case law
    • Commentary
    • Flexible working
    • Legal timetable
    • Maternity & paternity
    • Shared parental leave
    • Redundancy
    • TUPE
    • Disciplinary and grievances
    • Employer’s guides
  • AWARDS
    • Personnel Today Awards
    • The RAD Awards
  • Jobs
    • Find a job
    • Jobs by email
    • Careers advice
    • Post a job
  • XpertHR
    • Learn more
    • Products
    • Pricing
    • Free trial
    • Subscribe
    • XpertHR USA
  • Webinars
  • OHW+

Personnel Today

Register
Log in
Personnel Today
  • Home
    • All PT content
    • Advertise
  • Email sign-up
  • Topics
    • HR Practice
    • Employee relations
    • Equality, diversity and inclusion
    • Learning & training
    • Pay & benefits
    • Wellbeing
    • Recruitment & retention
    • HR strategy
    • HR Tech
    • The HR profession
    • Global
    • All HR topics
  • Legal
    • Case law
    • Commentary
    • Flexible working
    • Legal timetable
    • Maternity & paternity
    • Shared parental leave
    • Redundancy
    • TUPE
    • Disciplinary and grievances
    • Employer’s guides
  • AWARDS
    • Personnel Today Awards
    • The RAD Awards
  • Jobs
    • Find a job
    • Jobs by email
    • Careers advice
    • Post a job
  • XpertHR
    • Learn more
    • Products
    • Pricing
    • Free trial
    • Subscribe
    • XpertHR USA
  • Webinars
  • OHW+

TaxCoronavirusCompany carsLatest NewsPay & benefits

Company car drivers offered tax relief during coronavirus lockdown

by Ashleigh Webber 3 Apr 2020
by Ashleigh Webber 3 Apr 2020 Shutterstock
Shutterstock

Employees with company cars who are unable to use them because of the current lockdown are to be granted some relief on the tax they pay on their car benefit.

HM Revenue and Customs will not see cars as “available” for benefit-in-kind tax purposes if employees are able to “virtually” hand the car back to their employer – by posting their keys, for example.

The announcement has been welcomed by law firm MHA MacIntyre Hudson, which had been lobbying HMRC to relax benefit-in-kind taxation on staff with company cars. However, it has urged the government to go further to ensure employees with this benefit are not penalised while they are unable to use their vehicles.

“HMRC’s decision that company cars won’t be seen as available for benefit in kind tax purposes where they are ‘virtually’ handed back, by returning keys and fobs, was a positive move,” said Nigel Morris, employment tax director at MHA MacIntyre Hudson. “However, it perhaps does not go far enough in dealing with the associated issues of having a car that can’t be accessed, moved in an emergency situation or maintained – which the industry and HMRC may need to consider.”

Morris told Personnel Today that adjustments were usually made to the benefit-in-kind tax deductible from an employee’s salary if the company car was not available; if they were in for repair, for example. However, this relief is not offered if the period the car is unavailable is less than 30 days.

The law firm is now urging HMRC to lower this 30 day period to 21, to allow the relief to kick-in earlier.

“Otherwise even handing back may not save benefit in kind tax for drivers, or National Insurance Contributions for employers if the car is reinstated within 30 days [if the lockdown lifts],” Morris said.

Morris advised that employers should also consider revising their policies around private fuel benefit – for example, if they received funds for personal fuel use via company fuel card – if employees were unable to drive their company vehicles. This would prevent employees from being taxed on a benefit they cannot use.

“Even if a car is not withdrawn the private fuel benefit can be, as this does not need a physical return of the fuel card. It will, however, need a change of policy and employee agreement to proportionally reduce their benefit while the car remains unavailable. Companies wishing to make this decision need to take action by 6 April and should speak to their advisers urgently for the appropriate guidance,” he said.

Compensation and benefits opportunities on Personnel Today

Browse more compensation and benefits jobs

Ashleigh Webber
Ashleigh Webber

Ashleigh is editor of OHW+ and HR and wellbeing editor at Personnel Today. Ashleigh's areas of interest include employee health and wellbeing, equality and inclusion and skills development. She has hosted many webinars for Personnel Today, on topics including employee retention, financial wellbeing and menopause support. Prior to joining Personnel Today in 2018, she covered the road transport sector for Commercial Motor and Motor Transport magazines, touching on some of the employment and wellbeing issues experienced by those in road haulage.

previous post
Treasury urged to look again at coronavirus scheme loophole
next post
From firefighter to nutritionist: tackling obesity in the fire service

3 comments

Avatar
Alex 9 Apr 2020 - 1:57 pm

Hello

Do we have to ring hmrc and declare that or is this automaticly seen by their system and not taxed?

And also how do you prove that you have sent the keys back?

Kind regards

Reply
Avatar
Russell 10 May 2020 - 1:15 pm

This is good news but doesn’t explain how to actually claim back BIK tax on a company car during lockdown. The gov.uk website is too complex to find anything vaguely relevant to this subject without exhaustive and fruitless searches.

My company car went in for some repairs at a repair centre on 17th March. The centre went into lockdown before the car was ready, which was not released until 7th May, i.e after 60 days. Since then I have been furloughed and am not allowed to use my car for business use until furlough ends.

Where and how do I claim?

Reply
Avatar
Bhurinder Singh Gill 6 Aug 2020 - 10:20 am

I spoke to HMRC this morning (5th August) because I have retained possession of the car and the keys because I employer does not want to risk losing them – HMRC said sorry, the BIK stays on your tax code. Pretty poor.

Reply

Leave a Comment Cancel Reply

Save my name, email, and website in this browser for the next time I comment.

You may also like

How salary sacrifice electric cars can help staff...

20 Oct 2022

‘Ministers must increase employee mileage rates’ as costs...

23 Jun 2022

Commuting by car fast becoming unaffordable

11 Mar 2022

Hybrid working: the tax implications to consider

11 Feb 2022

Law firm Stephenson Harwood offers electric cars to...

1 Nov 2021

HR warned over employees’ use of private cars...

27 Jul 2021

Government publishes guide on safety for businesses due...

24 Jun 2020

Company car schemes on the rise as salary...

13 Sep 2012

Is employee car ownership dead or resting?

17 Aug 2011

Mixed Budget outlook for company car schemes

25 Mar 2011

  • The HR Bundle: Your one-stop guide to building a successful global HR Department PROMOTED | Get your hands on Deel’s free HR bundle...Read more
  • The Benefits of an Employee Assistance Programme PROMOTED | EAPs support employees in a range of ways...Read more
  • Intergenerational working and how to manage up and down the generations PROMOTED | The benefits and challenges of intergenerational workplaces...Read more
  • Bereavement in the workplace: How training can help HR get it right PROMOTED | HR professionals play an essential role...Read more
  • UK workforce mental wellbeing needs PROMOTED | The mental wellbeing support employers are providing misses the mark...Read more

Personnel Today Jobs
 

Search Jobs

PERSONNEL TODAY

About us
Contact us
Browse all HR topics
Email newsletters
Content feeds
Cookies policy
Privacy policy
Terms and conditions

JOBS

Personnel Today Jobs
Post a job
Why advertise with us?

EVENTS & PRODUCTS

The Personnel Today Awards
The RAD Awards
Employee Benefits
Forum for Expatriate Management
OHW+
Whatmedia

ADVERTISING & PR

Advertising opportunities
Features list 2023

  • Facebook
  • Twitter
  • Instagram
  • Linkedin


© 2011 - 2023 DVV Media International Ltd

Personnel Today
  • Home
    • All PT content
    • Advertise
  • Email sign-up
  • Topics
    • HR Practice
    • Employee relations
    • Equality, diversity and inclusion
    • Learning & training
    • Pay & benefits
    • Wellbeing
    • Recruitment & retention
    • HR strategy
    • HR Tech
    • The HR profession
    • Global
    • All HR topics
  • Legal
    • Case law
    • Commentary
    • Flexible working
    • Legal timetable
    • Maternity & paternity
    • Shared parental leave
    • Redundancy
    • TUPE
    • Disciplinary and grievances
    • Employer’s guides
  • AWARDS
    • Personnel Today Awards
    • The RAD Awards
  • Jobs
    • Find a job
    • Jobs by email
    • Careers advice
    • Post a job
  • XpertHR
    • Learn more
    • Products
    • Pricing
    • Free trial
    • Subscribe
    • XpertHR USA
  • Webinars
  • OHW+