A company car made available by reason of employment for an employee’s private use is a taxable benefit-in-Kind. This document discusses in detail the definition of a car and when a car benefit arises; calculation of benefit; non-availability restriction; exemptions; cars for disabled employees; reporting requirements; P11D treatment; salary sacrifice arrangements; and transitional rules.

Introduction

Company cars are one of the most common taxable benefits. In addition they have quite a number of com-plex rules and onerous reporting requirements. Company cars are covered by very specific legislation. ITEPA 2003, Part 3, Chapter 6

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 the tax guide 480 on expenses and benefits.

Employees chargeable to tax

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. ITEPA 2003,s 114

Is there a car benefit?

What counts as a car?


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.

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