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.
- 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
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