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If you have a company car but are not currently using it because of the coronavirus outbreak, then you will still be liable to pay the Benefit in Kind (BIK) unless you can prove the car is unavailable for use for 30 days.

Many people who have a company car may currently be furloughed or working from home and not using their company car. The assumption, therefore, may be that they will not incur a P11D benefit during this time.

However, the rules around company cars mean that because the employee has a car that is available for private use, then the BIK will still occur, even if they are not actually using it. This means the employee will still have to pay Income Tax and the employer will still have to pay their National Insurance Contributions (NIC).

In order to save both of these liabilities, the employee must prove that the car is unavailable for use of any kind for 30 consecutive days. The easiest way to do this is for the employee to take the car back to the office and give the keys to their employer.

If this is not an option because your office is not currently open, you can post the keys back to your employer with a letter stating that you no longer have use of the car or the authority to request the keys are returned to you. You must keep evidence of this, such as a dated copy of the letter and proof of mailing to satisfy any possible challenge by HMRC.

You should notify HMRC of the car being unavailable for use using a P46 (car) form.

If you would like help with proving your Benefits in Kind, please contact Ann Bibby on abibby@ellacotts.co.uk or 01295 250401.