Company Cars and Coronavirus – can you reduce the benefit-in-kind?

If you have been furloughed or are having to work from home and not using your employer provided company car, can you reduce the benefit-in-kind (BIK)? This could potentially save certain families some much needed money by way of reducing your tax.

In short, yes you could. However, we would recommend that you exercise caution before making any changes.

There are calls on HMRC to relax the rules around company cars during the current crisis. However, nothing formal has been released, so for the time being therefore we must simply consider the current HMRC guidance which states that ‘a car has to be unavailable to the employee for a minimum period of 30 ‘consecutive’ days’.

The critical note here is ‘unavailable to the employee’, not simply that the employee cannot or is not using the vehicle due to the current circumstances.

What is the definition therefore in HMRC’s eyes of ‘unavailable to the employee’?

• The employee must be physically incapable of using the vehicle for example, the vehicle has broken down and still in the garage for repair.
• The employee is unable to access the vehicle because they have handed the keys back to the employer and do not have authority to access the keys.
• Returning the vehicle to the employer place of work and returning the keys under the current guidance would probably not be classed as ‘essential travel’ so this may not be an option, unless the vehicle was left at the place of work before the lockdown and the employer has the keys with no employee access.
• Finally, your employer could introduce a policy prohibiting private use of a vehicle, which would mitigate the need for any of the above. However, HMRC will expect to see evidence of this in practice. GPS trackers and similar technology may be used for this purpose.

It is also good to remember that any fuel benefit attaches to the car so if the car usage is paused, so is the fuel scale charge for BIK purposes.

Do remember, however, that an employer must be able to provide evidence that the employee has not used or had access to the vehicle for a period of more than 30 days.