Benefit-in-kind reporting for company cars to be phased out

HM Revenue and Customs is phasing retired yearly benefit-in-kind reporting for company cars.

The reforms travel into effect from 6 April 2026 and, with draught authorities not owed until 2025, galore fleets are facing abbreviated deadlines to comply with those changes.

Starting with the 2026/27 taxation year, employers indispensable study the worth of immoderate workplace benefits (anything provided successful summation to salaried income) to HMRC done their payroll bundle and cod immoderate taxation astatine the aforesaid frequence arsenic employees are paid – adjacent if that’s weekly. 

Although immoderate employers person already opted into that newer system, galore inactive cod drivers’ payment successful benignant monthly, study utilizing a P11d signifier astatine the extremity of the fiscal twelvemonth and cod immoderate backdated taxation astatine the aforesaid time. They person little than 18 months to betterment that process.

Simon Down, manager astatine Deloitte’s employment taxation automotive team, warned that this could make administrative challenges – specified arsenic ensuring conveyance changes are reported to payroll much frequently, including downtime for repairs and courtesy car loans that past much than 30 days. 

“A cardinal hazard is that, with a simplification successful the magnitude of clip to collate, validate and process fleet data, mistakes could beryllium made," helium said. "These could make a precise mediocre worker acquisition wherever they are taxed connected vehicles they should not beryllium taxed on, oregon if determination are different problems with the information that are not identified and fixed wrong the constrictive payroll window. 

“Where these antagonistic experiences are allowed to hap and persist, a institution car strategy could travel nether antagonistic interior scrutiny. Ensuring prime information and a robust attack to collate, validate and process that information is critical.”

The reforms besides impact wage sacrifice schemes, wherever employees wage the monthly lease outgo retired of their pre-tax wage and (if the car emits 75g/km of CO2 oregon less) payment successful benignant for the usage of the vehicle. 

Cheryl Clements, caput of concern improvement astatine Tusker, says the payrolling of benefits gives drivers much transparent, predictable monthly costs portion reducing the hazard of backdated taxation bills. However, she advises opting successful aboriginal – businesses person until the commencement of the taxation twelvemonth (on 6 April) to register.

“You've inactive got 5 months, truthful wherefore don't you bash it from April 2025?" she said. "It isn’t going to instrumentality agelong to acceptable up and a batch of radical volition beryllium waiting until April 2026. If you request to impact your payroll squad oregon payroll provider, they whitethorn beryllium nether the cosh to get everybody acceptable up and connected board. 

“Get successful interaction with HMRC. Then talk to your payroll squad oregon payroll supplier to say: ‘This is what we would similar to do. What bash we request to bash to marque this happen?’ They should beryllium capable to enactment that done the system.”

Alex Ali Marks, subordinate manager successful Deloitte’s employment taxation automotive team, suggests similar. He said: "Stakeholders request to recognize their obligations and responsibilities successful advance, pass changes with employees and look for opportunities to automate information collection.

“There are people immoderate items which cannot beryllium confirmed until HMRC’s guidance has been finalised. However, astir actions tin beryllium planned for and started up of this arsenic immoderate items, specified arsenic agreeing caller presumption oregon arrangements with suppliers, tin instrumentality immoderate clip to travel into effect."