COVID-19 COMPANY CAR TAX GUIDANCE CRITICISED
Posted on 4th June 2020 at 15:04
Gaps in new company car tax guidance issued by HMRC could pose a problem for road safety and leave question marks over tax liabilities, the industry has warned.
The advice has been issued by tax officials, with the aim of helping fleet decision makers deal with company car drivers who are working from home or who have been furloughed.
Eight million employees were registered on the Government’s job retention scheme by the middle of May, while the majority of those who have continued to work have done so from home, including tens of thousands who pay benefit-in-kind (BIK) tax on a company car. That benefit however is being questioned by some employees with vehicles stood idle on driveways.
HMRC’s new guidance suggests how employees could return keys and avoid paying BIK but the fleet and leasing industry is warning the measures announced could fall short in practice.
The logic of separating keys from their cars has been questioned (if a vehicle needed to be moved in an emergency for example). In addition to this, the logistics and safety of returning vehicle keys to fleet managers may pose further issues in itself for employers and employees alike.
The Government also updated the guidance HMRC issues to employers on salary sacrifice arrangements to allow for the impact of Covid-19. HMRC rules allow for employees to opt out of a salary sacrifice arrangement where a lifestyle change significantly alters their financial circumstances, this now includes circumstances “directly arising from coronavirus”.
This however could be extremely costly for employers as they would potentially face contractual termination costs imposed by leasing providers.
The Government is being pushed to revisit the guidance to clear up any confusion and provide answers to some of the points that are being raised.
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