There have been some recent changes to Benefits in Kind which we would like to draw your attention to.

1. HMRC has now added a mileage rate for electric cars to their usual tax-exempt Advisory Fuel Rates. Employers may reimburse a maximum of 4p per business mile, of course supported by a mileage log.

2. No Benefit in Kind results if the employer provides charging facilities for electric cars and plug-in hybrids at or near the workplace.

3. If an employee has a change of company car, you can no longer send a P46 (CAR) notification. The only way to do it is through the employees' Personal Tax Account. So, the employee will have to do it themselves or, our Personal Tax Team may log in to their account and do it for them. You can still send P46 (CAR) for employees getting a car for the first time or ceasing to have a car altogether.

These paragraphs above are a snapshot of the changes, more in depth reading has been drafted by our Employment Tax Specialist, Dawn Foden-Smith.

Advisory Electricity Rate full fully electric company cars

HMRC will now accept that if you pay up to 4 pence per mile when reimbursing you employees for business travel in a fully electric car there is no profit. If you pay a rate of per mile for business travel no higher than the Advisory Electricity Rate, HMRC will accept there's no taxable profit and Class 1 National Insurance to pay. You can use your own rate which better reflects your circumstances if, for example, your cars are more efficient, or if the cost of business travel is higher than the guideline rate. However, if you pay a rate that is higher than the advisory rate and can't demonstrate the electricity cost per mile is higher, you'll have to treat any excess as taxable profit and as earnings for Class 1 National Insurance purposes. While electricity is not considered a fuel for tax and NICs purposes, the Advisory Electricity Rate will be published alongside the usual advisory fuel rates. The rate will be kept under review.

Workplace charging for all-electric and plug-in hybrid vehicles

An exemption from income tax and NICs is being introduced for any liability arising from the provision of charging facilities (including electricity) to employees recharging all-electric or plug-in hybrid vehicles at or near the workplace where facilities are made available generally to the employer's employees. It does not cover reimbursements for charging elsewhere paid for by the employee. This measure does not apply to taxable car and vans (chargeable under the car or van benefit charge respectively). These are taxable as benefits in kind and the provision of charging facilities and electricity are treated as connected costs already subject to a separate exemption. The measure will have effect from 6 April 2018.

Company cars reporting

You need to send a P46 (Car) form to HMRC if you:

  • provide company cars to your employees
  • stop providing a company car
  • provide someone with an additional car

Replacing a company car - If your employee changes their company car, you can no longer report this online or by paper you must tell your employee to contact HMRC to tell them of this change by logging onto their Personal Tax Account or by calling the taxes helpline. You will still report this change with your end-of-year forms.

If you would like further advice about 'Benefits in Kind' please contact your usual contact at Booth Ainsworth, Dawn Foden-Smith or Peter Williams.