HomeTaxEmployees with electric cars told to check tax codes

Employees with electric cars told to check tax codes

Employees who have company electric cars that they can use for private purposes should check their tax code numbers to ensure that HMRC has correctly processed this benefit-in-kind (BiK), the ICAEW is warning.

Forms P11D must be completed by employers to inform HMRC that they have provided their employees with this benefit-in-kind.

They 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’.

ICAEW said: “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.”

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