The following Employment Tax guidance note by Tolley in association with Philip Rutherford provides comprehensive and up to date tax information covering:
Company cars are one of the most common taxable benefits. In addition, they have quite a number of complex rules and onerous reporting requirements. Company cars are covered by very specific legislation.
Detailed guidance on each of the following sections to cover specific circumstances is available at Simon’s Taxes E4.625 (subscription sensitive), from HMRC at EIM23000 and within HMRC’s 480: Expenses and benefits ― a tax guide .
A taxable benefit arises on the provision of a company car by an employer to an employee or a member of his family or household and that car is available for non-business use.
For a taxable benefit to arise, the vehicle must be a car. A car is defined in ITEPA 2003, s 115 as a mechanically propelled vehicle which is not a goods vehicle, a motor cycle, an invalid carriage or a vehicle that is not commonly used as a private vehicle and unsuitable to be used as such. Therefore, every motor vehicle is treated as a car unless it meets the definition of one of the exceptions.
Generally, what constitutes a goods vehicle will be obvious but there is further consideration of what is covered by this exception in the Heavy goods vehicles guidance note.
What constitutes a motor cycle and invalid carriage are covered by the Road Traffic Act 1988, s 185 (subscription sensitive). Again, these should be obvious from the nature of the vehicle in question.
HMRC considers that almost all vehicles are capable of being used for personal use. Convincing HMRC that a vehicle falls within the final exception can, in practice, be very difficult.
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