Company Car Benefit Changes

Newsletter issue - April 09.

Company cars still used by company directors, sales representatives, car dealership staff, and certain disabled workers. All of these employees will be affected by changes concerning car benefits coming into effect from 6 April 2009.

• Form P46(car). Whenever an employee has a new company car the employer has to complete a form P46(car) with the details of the new vehicle and submit to their Tax Office at the end of the quarter. From 6 April 2009 the employer only has to complete a form P46(car) when an employee is provided with a car for the first time, or gives up the company car completely. Where the company car is replaced by another car the change will not be reported during the tax year, as those changes will be picked up on the annual form P11D.
• Motor-dealerships often allow their staff to drive show-room cars for demonstration purposes, and take those cars home. Each member of staff may have access to many different demonstration cars during one tax year, which would mean numerous forms P46(car) being completed to report each car. To ease this administration nightmare the major dealerships have come to local arrangements with their Tax Offices to provide details of an "average car" provided to their employees. These local arrangements are now being standardised across the country from 6 April 2009. Ask us if you need more detail about these new rules for motor-dealerships.
• Disabled employees. An employer may provide a severely disabled employee with a specially adapted car to allow that person to get to work. Where that car is also used for private journeys, other than ordinary commuting to and from work, there is a taxable benefit. This benefit in kind charge is reduced where the employee needs to use an automatic transmission car rather than a manual due to their disability. The CO2 emissions of the equivalent manual car (which will usually be lower) are used in the benefit in kind calculations. From 6 April 2009 the list price of the equivalent manual car will also be used in the benefit in kind computations. To ensure the employee has the correct car benefit included in his PAYE coding for 2009/10 he must tell his Tax Office that this special rule for disabled employees applies, and let the Taxman know what the cost of a manual equivalent car is.