ICAEW.com works better with JavaScript enabled.

TAX NEWS

Employees provided with electric cars should check they are taxed correctly

Article

Published: 21 Jun 2022 Update History

Issue with HMRC’s online forms P11D and P46(car) means that HMRC does not always correctly calculate electric car BIK.

Employees with electric cars that are available for private use and provided by their employer need to check their tax code numbers to ensure that HMRC has correctly processed this benefit-in-kind (BiK).

Forms P11D must be completed by employers to inform HMRC that they have provided their employees with BiK. Employers should also submit Form P46(car) quarterly where they have started to provide or stopped providing a car to employees. 

To report the benefit of a fully electric car on a paper P11D form, the approved CO2 emissions figure would be 0g/km. The type of fuel or power used would be letter "A".

Unfortunately, there are stories of issues when an electric car is reported using HMRC’s online returns. HMRC’s calculators default to assuming that the car is a high CO2 emitting petrol car. This calculates the annual BiK at 37% of the list price of the car rather than the 1% rate that applies to electric cars for the 2021/22 tax year.

Employees need to check that their tax calculations and code numbers accurately reflect what the BiK should be (1% of the price in 2021/22 and 2% of the price in 2022/23).

The only way to get the BiK charge corrected is for employers, or their agents or employees, to call HMRC.

ICAEW’s Tax Faculty has made representations to HMRC about this issue.

The faculty recommends that employers and practitioners either use a payroll software that supports the reporting of electric vehicles or report the benefit using a paper P11D return.

Contacting HMRC

  • HMRC employer helpline 0300 200 3200 – ensure that you have your PAYE scheme or accounts office reference to hand, otherwise HMRC can provide only general advice
  • HMRC general helpline 0300 200 3300

Read more

ICAEW Know-How from the Tax Faculty

This guidance is created by the Tax Faculty, recognised internationally as a leading authority and source of expertise on taxation. The Faculty is the voice of tax for ICAEW, responsible for all submissions to the tax authorities. Join the Faculty for expert guidance and support enabling you to provide the best advice on tax to your clients or business.

More support on tax

ICAEW's Tax Faculty provides technical guidance and practical support on tax practice and policy. You can sign up to the Tax Faculty's free enewsletter (TAXwire) which provides weekly updates on developments in tax.

Sign up for TAXwireJoin the Tax Faculty
The future of tax after COVID

As digital technologies transform society, the UK government is grappling with balancing the books while ensuring its tax system is fit for purpose. Join us as we take a look at the issues and challenges facing the tax system.

Read more

More from the Tax Faculty

Latest news
Making tax digital image
TAXwire

Stay up to date with the latest developments in tax by signing up to the Tax Faculty's weekly enewsletter

Practical guidance
Cover
TAXline

Comprehensive support for Tax practitioners each month from the Tax Faculty and expert contributors.

Technical support
Tax Faculty image
Webinars

Expert advice from the Tax Faculty's technical managers on all the developments in tax policy and practice.