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ACFO's autumn national seminar demystifies company car tax

Date: 06 October 2015   |   Author:

Car fleet operators' association ACFO held a national seminar last month, looking, among other things, at the issues around EV taxation and company cars. Christofer Lloyd went along to hear what the experts had to say

Members of the Association of Car Fleet Operators were invited to question officials from HM Revenue and Customs, the DVLA, Highways England and the Health and Safety Executive at the organisation's Autumn National Seminar, held at St George's Park National Football Centre near Burton-Upon-Trent on 18 September.

This event, called 'A day at the taxes', also signified the "first time that fleet decision-makers will be able to hear senior officials from the four major Government bodies that impact on corporate transport operations in one location on a single day",ACFO chairman John Pryor said ahead of the seminar.

The seminar was sponsored by Vauxhall and Arval, and consultant Wayne Millward from Arval spoke about the ins and outs of providing staff with cash versus company cars, stating that the latter again seem to be in favour, following the proliferation of corporate manslaughter laws and the way that companies can be sure that cars used on business are properly insured and maintained.


Kicking off the Government talks, HMRC technical advisor Elizabeth Ward-Lewis explained the difference between Advisory Fuel Rates and Approved Mileage Allowance Payments, clarifying how the former applies to company car drivers - although employers can choose to pay actual fuel costs rather than the advisory rate - while AMAPs are statutory rates that apply to employees driving their own car for business.

In the case of AFRs, employers can choose whether to repay business miles to staff who pay for their fuel themselves, or pay all fuel and request that employees reimburse for fuel used on private journeys. Linked to this, businesses must keep mileage reports in tandem with AFRs, although this is not necessary for drivers using their own cars and being paid AMAPs, stated Ward-Lewis.

Things become more complicated when fuel type is taken into account, with separate AFRs applicable to petrol, LPG and diesel models, while AMAPs apply across any car. Consequently, employees using private electric cars for business miles should be paid AMAPs to cover the cost of charging the vehicle - should they have to charge somewhere other than a funded company charger - while those who opt for an electric company car should be reimbursed for the actual charging cost, rather than receiving AFRs.

Electric vehicle BIK rates

Calculating the amount of benefit-in-kind taxation due with electric cars involves several options. Employees with a company electric car who charge at work are due no additional benefit.

Those who have their own electric car, however, and use it for business only or mixed use must pay taxable BIK on the total cost of electricity used and receive AMAPs or Mileage Allowance Relief for business miles travelled. On the other hand, staff who use their car solely for personal use face taxable BIK on the total cost of electricity used, said Ward-Lewis.

But the situation changes should an employee charge their electric car and pay for their own electricity. Electric company car users are entitled to an 's337/8 deduction' for the cost of electricity used for business miles covered. Those using their car for private miles - whether it's their car or a company car - face no tax implications. Private electric car users, meanwhile, should received AMAPs and/or MAR for business miles travelled.

Ward-Lewis added that in the case of employers reimbursing their staff for charging an electric car at home, company car users covering business miles will receive "agreed dispensation" or a record on their P11D with a matching deduction. However, from the start of the new tax year on 6 April 2016 they will be covered by a self-assessment exemption.

Those covering mixed or private miles, though, can expect reimbursement to be taxed as earnings, with the employee entitled to a deduction for the cost of business miles travelled.

Private electric car drivers, meanwhile, can receive AMAP and MAR payments for business miles paid on a per mile basis, while flat-rate reimbursement is taxed as earnings plus AMAP and MAR payments for business miles travelled. Private car owners not driving for work will have the level of reimbursement taxed as earnings.

The final scenario presented by the HMRC comes in the form of an employer providing the electricity needed to charge a car. In this case fleet drivers are due no additional benefit while private car owners will be subject to taxable BIK on the total cost of electricity used plus AMAPs and/or MAR for any business miles covered.

Update car details online

Ward-Lewis also introduced the online digital car service, which allows fleet drivers to check or update their company car tax details online if the employer doesn't payroll their car benefit. This means that users can update their car details, replace their old car with a new one on the system and add or remove car fuel benefit - changes that contribute towards their tax code and the amount of tax they're charged.
The DVLA added that employers should not ask their drivers to print their 'View Driving Licence' record and instead should request access to the 'Share Driving Licence' function.

Other conference highlights

Highways England aims to slash the number of people killed or seriously injured on the roads to fewer than 1393 per year by 2020, with the ambition for that to be "approaching zero" by 2040, stated Heather Lang, central on road area manager.

Lang also presented new technology and better use of road space as solutions to the challenge of reducing congestion levels in spite of growing traffic numbers, with opening the hard shoulder on busy motorways to traffic cited as an example. "They are no less safe than standard three-lane motorways," she added.

Responding to criticism of the replacement of the Dartford Crossing toll booths with remote payment options, Lang stated that despite "teething problems" compliance levels of 93% "for us is pretty good for a new system".

Meanwhile, the Health & Safety Executive's Andrew Wetters (pictured right) reiterated the need for fleet managers to make sure that health and safety policy is understood by drivers and managers, with bosses identifying risk, communicating this to employees and providing training when problems are

Managers should also ensure that risk assessments are updated annually.

As the show was sponsored by Vauxhall, ACFO members were invited to view the manufacturer's new Astra - which is likely to be a fleet favourite thanks to the low whole-life costs of fleet-focused Tech Line models - following a presentation by Paul Adler, Vauxhall's fleet marketing and Motability manager.