What are the rules for company car users on furlough?

Many individuals with company cars rely on them for daily use and as a result, the question of whether employees furloughed under the Coronavirus Job Retention Scheme can continue to use their company cars has arisen. This is fine to do, however employees who use company cars should be aware that they are still classed as a taxable benefit, whether on furlough or not.

This taxable benefit arises from having a company car that is made “available” to the employee for their private use. If this vehicle is not available for 30 consecutive days or more, the benefit can be reduced under normal circumstances. The same rule also applies if the employee is provided with private fuel.

Employees currently on furlough may not need their company car and as a result, may decide to stop the benefit and temporarily give the car back. It is our understanding that in these situations, HMRC accept that company cars will not be classed as “available”.

For a car to be classed as “not available” to the employee, it would normally mean returning the car to the employer. However as these are not normal circumstances, it may not be possible for employees to return the car. By exception, HMRC will now accept the return of the keys (in turn making the vehicle unavailable) as sufficient.

Employees currently on furlough should consider their needs in relation to their company car – deciding against using company cars during this period could lead to cost savings in terms of taxable benefits being significantly reduced (especially as the Coronavirus Job Retention Scheme has now been extended, potentially meaning longer furlough periods for employees).

For further advice on company cars for furloughed employees, please contact Julie Walsh using the button below.

 

This information is correct as of 20 May 2020. This blog is for general guidance only. Recipients should not act upon any of the information provided without seeking specific professional advice tailored to your circumstances, requirements or needs. Please contact PM+M before making any decisions based on any matters relating to this blog.

For more information about anything in the above article, please get in touch using the button below.
Julie Walsh
Stay Connected