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Cars and other vehicles

This section details the various benefit in kind implications regarding the provision of company vehicles to employees and the use of private vehicles for business purposes.

Company cars

If an employee or a company director is provided with a car by their employer and is allowed private use of the car (even if this private use results from the employer insisting on the employee taking the vehicle home), a benefit in kind charge will arise.

For benefit in kind purposes, a car can be described as a road vehicle, usually with four wheels and powered by an internal combustion engine, primarily designed to carry passengers.

Cars are charged by reference to the scale charge, which is the deemed value of the benefit in kind. It takes account of all expenses associated with the private use of a company car. Private motoring expenses paid directly on behalf of the employee or reimbursed to them will not give rise to a tax liability in addition to the scale charges.

There may be a separate additional charge if fuel is also provided.

The scale charge does not cover parking fines incurred in the company car nor does it cover the cost of an employee’s own driving licence.

To calculate the benefit in kind due, reference should be made to the published Car and Fuel Benefit Tables (form R22(b)) that establish a cash equivalent for benefit in kind purposes.

Table of flat rate cash equivalents applicable for 2009/2010 and subsequent tax years

Cylinder capacity of car (in cubic centimetres)Cash equivalent in respect of car for purposes of section 2ICash equivalent in respect of fuel for purposes of section 2J
Electric car (regardless of cylinder capacity) Nil Nil
1,000 or less £800 £800
1,001 to 1,200 £1,100 £950
1,201 to 1,800 £3,600 £1,500
1,801 to 2,500 £5,000 £1,750
2,501 to 3,500 £7,000 £2,000
3,501 to 5,000 £10,000 £2,250
More than 5,000 £12,000 £2,500

What information do I need to calculate the scale charge and complete form T9 for a company car?

To complete form T9 and to calculate the scale charge for the 2009/2010 tax year and subsequent tax years you will need the following details:

  • make and model of the car
  • car cylinder capacity (cc)
  • period of use of the car.

The original market value is not taken into account in determining the scale charge for 2009/2010 and subsequent tax years.

The scale charge from the 6th of April 2009 is based purely on the car cylinder capacity (cc). The cylinder capacity is the cylinder capacity of its engine calculated as for the purposes of the Licensing and Registration of Vehicles Act 1985.

Mileage records

Business mileage is not taken into account in determining the car scale rates for 2009/2010 and subsequent tax years.

In what circumstances is the scale charge reduced?

The scale charge may be reduced for the following reasons:

  • the car was not available for the full year, or
  • the employee pays a contribution to the employer for the use of the car.

What does 'unavailable for use' mean?

Where a car is unavailable for any part of the tax year (for example when it is purchased part way through the year), the car benefit is reduced proportionally.

A car is also regarded as unavailable if it was incapable of being used at all for at least 30 consecutive days, e.g. if it was undergoing repairs at a garage.

What if an employee contributes towards the cost of buying the vehicle?

This does not apply for 2009/2010 and subsequent tax years, as the original market value is disregarded for the purposes of calculating the scale charge.

Contributions towards running expenses of vehicle

If an employee is required, as a condition of the car being made available for private use, to pay a contribution towards the car, the car scale rate can be reduced by the amount paid by the employee. If the employee's payment exceeds the scale charge figure, then the taxable amount is NIL.

It is important to differentiate between a contribution towards the use of the car and a contribution towards fuel provided by an employer. It should be specified within a contract of employment, what the contribution covers. Remember that fuel is an all or nothing charge, so if an employee contributes towards fuel, but cannot prove that all fuel covering private mileage has been repaid in full, then the full fuel scale rate charge can still apply.

Where an employee (or their family member) has the use of more than one car at the same time

For 2009/2010 and subsequent tax years, if more than one car is made available concurrently to an employee or their family member, the scale charge for each car is applied in full without alteration.

What if the company car changes during the year?

When an employee’s company car is changed during a tax year, the charge for the old and new car should be calculated in accordance with the normal full scale rates applicable for that car. The resulting annual scale charge for each car should then be time apportioned based on the number of days made available to reflect the period of use for each car.

Home to work travel only

Home to work travel is a private journey. Therefore, strictly a benefit in kind should be calculated using the scale rates for cars. However, if a company car is available for home to work travel only, a benefit in kind may be calculated at the following pence per mile rate if it is more beneficial than the full scale charge.

In order for an employee to qualify for these pence per mile rates, there must be a change to the contract of employment, confirming that the only private mileage allowed by the employee is home to work mileage.

A copy should be forwarded to the Division to confirm this change.

In the event that the employee fails to comply with this directive, then the full scale rate charge should be applied.

Type of VehicleFirst 6,000 MilesOver 6,000 Miles
Motor Vehicle - engine capacity up to 1299cc 46.0 34.0
Motor Vehicle - engine capacity 1300cc or over 52.0 40.0
Motor Cycle 26.0 17.0

The restriction of home to work travel only, must be specified in the employee’s employment contract.

What if the vehicle is leased?

An employee is charged a benefit in kind when a car is made available by their employer. The normal scale charge will therefore apply regardless of whether the employer owns the car or has leased it.

Pool cars

A pool car is a car made available to, and used by, more than one employee. It should not be used by one employee to the exclusion of others and should always be kept overnight at the premises of the employer.

A genuine pool car should therefore not be available for private use and no benefit should arise.

Reasons such as parking difficulties or possible vandalism cannot be used as an explanation for the employees taking the car home. In these circumstances, the pool car will be regarded as a company car and T9 forms should be submitted accordingly.

A pool car will normally be a car that;

  • is kept outside the business premises, kept in a car park adjacent to the business premises or locked in a compound adjacent to the business premises at weekends/ weeknights
  • is insured for a number of different employees
  • is driven by a number of different employees
  • has a log maintained of the users of the vehicle
  • is available for business use only

It will not normally be a car that;

  • is taken home at weekends/ weeknights by employees
  • is insured for a single employee
  • is driven by a single employee
  • has no log maintained of the users of the vehicle
  • is available for business and personal use.

Are vans and lorries chargeable?

Commercial vehicles such as vans and lorries do not give rise to a benefit in kind charge provided that the main business purpose of the vehicle is for:

  • the transportation of goods or materials used within the trade
  • the transportation of goods in the course of conducting a delivery service
  • the transportation of tools or equipment used by the employee in performing their duties.

Are MPV, SUV, 4x4 and double cab pick-ups chargeable?

Multipurpose Vehicles (MPV) and Sports Utility Vehicles (SUV) will not normally qualify for the commercial vehicle exemption and will be treated as a car. If the vehicle is fitted with a second row of seats, it is considered to be designed to carry passengers and will be treated as a car.

MPV and SUV include;

  • double cab pick-ups e.g. Nissan Navara
  • “4 x 4s” (e.g. Land Rovers, Shogun, BMW X5)
  • people carrier (e.g. Renault Scenic)

Are hybrid dual power vehicles chargeable?

Only a vehicle solely powered by electricity is exempt. Hybrid petrol/electric cars will be charged in accordance with the normal Car and Fuel Benefit scale rates.

How do I calculate the charge for a vehicle other than a car?

If a motorcycle or a van (which does not qualify for exemption) is available for private use by an employee, then the benefit in kind charge will be 20% of the market value of the vehicle when first made available plus the value of fuel used for private journeys.

An employee may opt to be charged in line with the car and fuel scale tables if they consider that would be more favourable.

What if an employee is on 24 hour call?

If general private use of the car is permitted, a car benefit will be charged in the normal manner even if the employee is on 24 hour call, unless the car falls into the category of an emergency vehicle (see following section).

If the employee is on 24 hour call and the only private journey permitted is between home and work, this private use can be discounted and there will be no car benefit.

The requirement to be on 24 hour call should be included within the employee’s contract of employment and a record should be maintained of all occasions when the employee was required to attend to business out of normal working hours.

In the event that a record of call outs and contract of employment cannot be produced, the office will charge the employee under the normal benefit in kind rules for company cars.

Employers who think that their employee qualifies for this exemption should contact the Income Tax Division to ensure that their determination is correct.

Exempt Emergency vehicles

Where a vehicle is fitted out as an emergency vehicle, used to attend emergencies and is made available to an employee for personal use, a case may be made to the Division requesting an exemption in respect of the vehicle from the imposition of a benefit in kind charge. An exemption may be granted on a case by case basis upon consideration of all the facts relating to the provision of the vehicle to the employee.

If an emergency vehicle is provided to an employee for personal use without an exemption being authorised by the Income Tax Division, then the normal rules regarding charging benefit in kind for the provision of a vehicle should apply.

For clarity, the following emergency vehicles are by their nature exempt from a benefit in kind charge;

  • Ambulance
  • Fire engine
  • Police Car
  • Paramedic

The requirement to be on call during the period that the vehicle is made available for personal use must be included within the employee’s contract of employment and a record should be maintained by the employer of all occasions when the employee was required to attend to business out of normal working hours.

In the event that a record of call outs and contract of employment cannot be produced, the office may charge the employee under the normal benefit in kind rules for company cars.

Employers who think that their employee qualifies for this exemption should contact the Income Tax Division to ensure that their determination is correct.

Examples of emergency vehicles for which an exemption may be granted are those fitted out to attend emergencies and used for the following purposes;

  • Police purposes
  • Fire brigade purposes
  • Ambulance purposes
  • Road side accident purposes e.g. Road Side Accident Response Vehicle
  • Coast guard purposes
  • Civil defence purposes
  • RNLI purposes
  • Bio hazard purposes Vehicle e.g. Dead Animal Removal Vehicle

Vehicles of this type would normally have the following;

  • Flashing warning beacon
  • Audible warning device e.g. siren

Other exempt vehicles

In addition to the emergency vehicles above, other vehicles can be exempt from a benefit in kind charge.

This section of the guide provides some detail regarding these other cars and vehicles that are exempt from a benefit in kind charge. If in doubt you should contact the Income Tax Division to obtain clarification as the whether a benefit in kind charge is due on a particular car or vehicle.

Vans and lorries

Commercial vehicles such as vans and lorries are not chargeable provided that the main business purpose of the vehicle is for:

  • the transportation of goods or materials used within the trade
  • the transportation of goods in the course of conducting a delivery service
  • the transportation of tools or equipment used by the employee in performing their duties.

Single cab pick-ups may also fall within the exempt category as long as they meet the criteria above. However, if the vehicle is clearly not required or used to carry goods, materials and tools, then the exemption does not apply.

Electric cars

In addition to vans and lorries, a car solely powered by electricity is also an exempt vehicle. Note however that hybrid electric vehicles, do not qualify under this exemption.

Mini buses

If employees are picked up only for journeys between home and work and journeys between one job and another, there will be no benefit in kind charge.

A minibus normally would have a seating capacity of between 9 and 12.

Transfer of a company owned vehicle to the employee

When a company car is given to an employee, a benefit in kind charge will arise, unless the employee pays the employer its market value at that time.

Providing the car has been used or depreciated by the company prior to the transfer, the benefit in kind charge is the open market value of the car at the time it is transferred to the employee.

If the car has not been used or depreciated by the company before it is transferred to the employee, the benefit in kind charge is the higher of;

  • the open market value at the time of transfer
  • the cost to the employer of providing the benefit.

Provision of car fuel (company cars)

There will be a fuel scale charge when an employee has a company car and the employer also provides fuel for any mileage other than business mileage.

How do I calculate the fuel charge?

The fuel charge is calculated by reference to the annual Car and Fuel Benefit Table (form R22 (b)) which determines the cash equivalent appropriate for the cylinder capacity.

What if an employee pays towards the cost of the fuel provided

The scale charge for fuel is an all or nothing charge. This means that unless the full cost of private fuel is paid for by the employee, the full fuel scale charge will apply. There will be no reduction to the scale charge should an employee make only a partial contribution towards the cost of private fuel.

Business use of a vehicle owned by an employee

If an employer pays a reasonable mileage allowance that reimburses the employee for business travel only, this may be paid without a tax deduction. There is no requirement to report these payments or to apply for a dispensation as long as the pence per mile rate paid does not exceed the rates published by Income Tax Division (see below). Remember, records should be maintained for inspection on request.

The pence per mile rates referred to above are detailed below;

Type of VehicleFirst 6,000 MilesOver 6,000 Miles
Motor Vehicle - engine capacity up to 1299cc 46.0 34.0
Motor Vehicle - engine capacity 1300cc or over 52.0 40.0
Motor Cycle 26.0 17.0

A business journey is one which involves travel from one place of business to another. Business journeys would normally be;

  • travel from office to premises of client and return
  • travel to an alternative business destination that is not their regular place of employment e.g. an auditor who is required to undertake their duties away from their normal office
  • travel to a location where they perform substantial duties e.g. an architect visits a building site to check plans on the way to office

What is a private journey?

A private journey is any journey other than a business journey and includes home to work travel.

What is a split journey?

In some cases a journey can be a split journey, including both some business and some private travel. In these cases the private journey element will be subject to a benefit in kind charge.

A split journey could be;

  • a journey from home to client premises then office – home to client is business while client to office is private
  • a journey from office to alternative business destination via destination for private purposes e.g. employee leaves work to attend meeting at other business premises, but detours to purchase private goods from high street store before continuing to final destination – office to private destination is private, while onward journey to final destination is business.

Normal place of work

The normal place of work is where an employee normally performs their duties of their employment. An employee’s home would not be regarded as the normal place of work unless there is an objective requirement for them to carry out their duties of office/employment from their home.

It is not sufficient for an employee merely to carry out some duties at home or do some work from home using equipment owned by the business. Usually the employer provides the facilities necessary for the work to be performed at the business premises. Working from home is generally a matter of personal preference, rather than contractual requirement.

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