Lockdown – should you still be paying BiK tax?

It may be a relatively small issue right now but the Association of Fleet Professionals (AFP) said the Government and HMRC should examine the impact.

Co-chair Caroline Sandall said that the subject should be placed in perspective among a whole range of more important issues during the crisis but that there was genuine cause for concern.

She said: “Overall, there is a fundamental question of fairness here. Can you justify taxing people on a benefit when that benefit is not really available for use? That’s what is happening at the moment with company cars and vans that can’t be used except for essential travel.

“Plus, when you drill further down into the subject, there are a whole range of situations being faced by individuals. The current crisis will impact on all drivers of company cars and vans to a degree but potentially some much more severely than others.

“Among the hardest-hit are drivers who have been furloughed and could find it tough to pay their tax bill while on only 80% of their usual salary. This is especially the case if they have an older car with a high CO2 figure on which the benefit-in-kind increased at the start of the new tax year.”

She added that there were other implications. For example, there are drivers who expected to have taken possession of a new company car with lower benefit-in-kind taxation but have had to hang onto their old vehicle because delivery was currently impossible.

“If you were planning to be driving a new, lower emissions car or even an EV on April 2 that attracted very low or zero taxation, then it seems unfair if you are taxed on your four-year-old diesel and being charged an additional couple of hundred pounds every month.”

Sandall said that there was also a question of whether company car drivers should be able to SORN their vehicle during the lockdown period and avoid paying benefit-in-kind altogether.

“Some drivers will not be using their company cars at all because of their situation, perhaps because they have had to self-isolate or are part of an at-risk group. It seems plausible that they should potentially be given the option of opting out of their company car temporarily.”

She added that the AFP was aware that other parties had raised the issue of benefit-in-kind for fleets during the lockdown but it would be best if the industry spoke with one voice.

“This is something that we believe should be raised with the Government and HMRC at the appropriate time and, as the leading body for fleet professionals, we are would like to act as the focal point for any co-ordinated activity undertaken across our sector.

“Job one, from our point of view, is to look at ways of recording potentially useful information regarding the driver and company car usage, including the dates of any furlough, the mileage they are covering and more. These might prove essential in any future discussions with the authorities.

“Ideally, of course, we would like to see a suspension of benefit-in-kind taxation on company cars and vans for the period of the lockdown but, given government and HMRC current priorities, that may not be possible.”