11 July 2022

Companies providing electric car schemes should ensure vehicles are taxed correctly

Earlier in June the Institute of Chartered Accountants in England and Wales (ICAEW) published an article highlighting that some members have reported that HMRC’s systems have incorrectly interpreted its online P11D form, which has led to HMRC incorrectly calculating the Benefit in Kind (BiK) tax for zero emission electric cars.

When reporting the benefit of a zero-emission electric car on Form P11D the approved CO2 emissions figure would be 0 g/km. However, it seems that when such a car is reported using HMRC’s own online Form P11D, it may be incorrectly categorised as a high CO2 petrol car and allocated a BiK percentage of 37%, which it then uses to calculate the BiK.

The ICAEW is therefore recommending that employers either use their own payroll software that supports the reporting of zero emission electric cars, or reports the benefit using a paper form P11D.

Fleet managers and companies providing fully electric vehicles to employees must be aware of this issue and ensure everything is being done to counter the issue.

Although the ICAEW has made representations to HMRC, at present it seems the only way to correct this error is for employees and employers, or their agents, to phone HMRC:

• HMRC employer helpline – 0300 200 3200
• HMRC general helpline – 0300 200 3300