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AFP calls for review of BIK under coronavirus lockdown

Date: 01 April 2020   |   Author: Illya Verpraet

The Association of Fleet Professionals (AFP) says benefit-in-kind (BIK) taxation should be reviewed to reflect the impact of the coronavirus lockdown.

Since travel has been restricted to just essential journeys, a lot of people with company cars are not using them or using them very little. However, they continue to pay tax on this company perk.

Co-chair of the AFP Caroline Sandall said: "There is a fundamental question of fairness here. Can you justify taxing people on a benefit when that benefit is not really available for use?"

"Among the hardest-hit are drivers who have been furloughed and could find it tough to pay their tax bill while on only 80% of their usual salary. This is especially the case if they have an older car with a high CO2 figure on which the benefit-in-kind increased at the start of the new tax year."

The change in BIK bands that comes into effect on 6 April complicates things further: Some drivers expected to take delivery of a car with a lower CO2 output, but are having to hang onto their old car because almost all deliveries have been suspended. To make matters worse, even cars registered before 6 April might see some changes in their BIK band, as those emitting 90g/km of CO2 or more on the NEDC cycle will generally go up one percentage point.

Sandall commented: "If you were planning to be driving a new, lower emissions car or even an EV on April 2 that attracted very low or zero taxation, then it seems unfair if you are taxed on your four-year-old diesel.

"Some drivers will not be using their company cars at all because of their situation, perhaps because they have had to self-isolate or are part of an at-risk group. It seems plausible that they should potentially be given the option of opting out of their company car temporarily."

"This is something that we believe should be raised with the Government and HMRC at the appropriate time and, as the leading body for fleet professionals, we would like to act as the focal point for any co-ordinated activity undertaken across our sector."

Concluding, Sandall also gives some advice for fleets with drivers in this position: "Job one, from our point of view, is to look at ways of recording potentially useful information regarding the driver and company car usage, including the dates of any furlough, the mileage they are covering and more. These might prove essential in any future discussions with the authorities."