Tax & Accounting News

Rules on company car replacements are changed

12/07/2010

Employers will be able to notify HM Revenue and Customs (HMRC) of any company car replacements online from April 2011.

If a car is provided to an employee and they can use it for private journeys, the car benefit must be reported to HMRC and Class 1A National Insurance contributions paid.

Providing information when individual cars are replaced, using the old P46 (car) paper forms, has not been compulsory since April 2009, although employers still need to complete a form if an employee or director is receiving the benefit of a company car for the first time or if a car is withdrawn and not replaced.

The rules were changed in an effort to save on administration costs for businesses, but with the introduction of the new electronic system next year, employers may once again choose to inform HMRC of any replacements on a voluntary basis.

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