HMRC updates guidance on lockdown company car tax
07 May 2020
Author: Simon Harris
HMRC has issued new guidelines on company car tax for employees whose company cars are not being used during lockdown.
According to the updated guidance, furloughed employees or those working from home because of the coronavirus, and provided woth a company car, which they still have, should still be liable for BIK tax because the vehicle is 'available for private use'.
HMRC says this is the case even if employees are instructed not to use the car, asked to keep a photograpic image of the mileage before and after the car's period of no use, and if the employee is unable to physically return the car or it cannot be collected from the employee's address.
But where restrictions on movement applies because of coronavirus and prevents the car from being handed back or collected, HMRC will accept that a company car is unavailable in the following circumstances:
- Where the contract has terminated - from the date that the car keys (including tabs or fobs) are returned to the employer or to a third party as instructed by the employer
- Where the contract has not been terminated - after 30 consecutive days from the date that the car keys (including tabs or fobs) are returned to the employer or to a third party as instructed by the employer
Theguidance from HMRC states: "The return of keys means that a car cannot be driven in any circumstances even if it is still in the possession of your employee.
"We also recognise that following relaxation of coronavirus restrictions, it may take some time to collect cars where contracts have been terminated.
"As long as your employee continues to have no access to the keys until the car is collected from them, HMRC will still regard the car as being unavailable."