The UK-wide stay at home instruction arrived so quickly that many people were not able return a company car that they were no longer permitted to use. In such circumstances the car remains available to the employee to use privately and hence the taxable benefit continues.
HMRC will accept that the company car is “not available” and not taxable (even where it is parked at the employee’s home) in two circumstances:
The contract to lease or provide the car has been terminated, and the car keys have been returned to the employer or to an approved third party (eg the dealer).
The lease contract has not been terminated, but the car keys have been returned to the employer or approved third party, then 30 days after the keys were returned the car will be considered to be “not available”.
Remember all electric company cars have zero taxable benefit in 2020/21 (our newsletter 28 November 2019), so its not necessary to change the lease on the director’s Tesla.
Where the employee is using their company car or their own car for voluntary work during the coronavirus crisis, and the employer is reimbursing the mileage costs, those reimbursements are taxable. This is because the journeys undertaken for voluntary work are not business journeys. The reimbursed amounts must be reported on the P11D or included in a PAYE settlement agreement.
Some employees are living away from home while continuing to work, to avoid infecting members of their household with the coronavirus. Where the employer is paying for that alternative accommodation, that amounts to a taxable benefit, which must be reported on the P11D for the relevant tax year.
Employees who live on the site of their permanent employment, are taxed on the value of that accommodation unless one of these conditions are met:
Its necessary for the employee to live there to properly carry out their duties
- The accommodation is provided to allow the employee to better perform their duties and it is customary for such employees to use such accommodation; or
- There is a threat to the employee’s security and special security arrangements are in force that require the employee to live in that accommodation.
NB: HMRC has not confirmed whether “security arrangements” includes health security, as it normally means a terrorist or stalker type threat.