Do I still need to pay Company Car Tax whilst furloughed?

Do I still need to pay Company Car tax whilst furloughed or working from home?

Company Car whilst Furloughed

With the UK government recently announcing an extension of the furlough scheme until October and many of us working from home during the Coronavirus epidemic, its not been overly clear what the BIK implications are when it comes to a company car.

However, HMRC have now updated their website to explain to employers and employees how to treat a company car under the different circumstances, this even includes the salary sacrifice scheme.

Employers must treat the car as being “available for private use” even if the employer has told the employee not to use the vehicle during the period.

This covers the following points:

  • If you have instructed your employee not to use their vehicle
  • You have asked your employee to provide photographic proof of the mileage before and after the period of furlough
  • If you employee is unable to physcially return the vehicle or you cannot arrange collection of the vehicle from your employee.

HMRC will accept that a company car is unavailable to an employee if the following key points are covered:

  • If the employment contract has been terminated and the car keys have been handed back to the employer or to a third party agent instructed by the employer.
  • Where an employment contract has not been terminated after 30 consectutive days from the date that the vehicle’s keys have been handed back to the employer ot a third party agent instructed by the employer.

HMRC recognises that if the keys are no longer with the employer, the vehicle cannot be used or driven, even if that car is parked on the employees driveway.

As the Coronavirus lockdown restrictions are relaxed over the next weeks and months, HMRC have said that they’ll recognise that it may take some time to collect employees cars where an employment contract has been terminated, and will class this vehicle as ‘unavailable’ so long as the employee does not have any access to the vehicle.

Salary Sacrifice Schemes

HMRC have also recognised the changes in lifestyle for employees on the salary sacrifice scheme and their changes of lifestyle due to the Covid-19 lockdown restrictions.

More information on the Salary Sacrifice scheme can be found on HMRC’s website, with the links listed below.

Related Links

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