We are now moving into our second week of lockdown to help slow the spread of COVID-19. As we all do our bit and stay at home, it is likely that those of us with company cars will no longer be using them. But what do you do about your company car or van during the current emergency?
The company car, or van, represents a significant taxable benefit. So do you need to keep paying this tax whilst you’re working from home? Especially considering that many of us may be working on a reduced salary during the coronavirus pandemic.
What should you do?
Currently, in order for the car benefit no longer to apply, the vehicle should not be available for 30 consecutive days. Clearly, if this outbreak goes on for over 30 days, which appears highly likely, you are eligible to take steps to reduce the tax you pay. This may be of use to those who use a private car as well.
The steps you can take now to reduce the tax you pay on your car
Here is what you need to do to ensure that you reduce the taxable benefit that you pay on the car you use for your work:
- As a director or an employee, you need to keep a note of the last day the vehicle was used for private journeys and the mileage.
- There should be a written prohibition notice in place to say the car is ‘not available for private use’ until further notice. You can put this notice in the window or on the dashboard of your car, and even take a picture of it so you have proof with dated evidence.
As long as you do both of the actions above, you should have no problems with HMRC.
Warning if you do you use it!
However if you use your car just once privately then the 30 days starts all over again. This is because the ‘not available for private use’ doesn’t apply for that journey. And your last day of use begins all over again. If you do have a purely business need however you can use the vehicle, but you must ensure you keep sufficient records that demonstrate the journey was for business use.
Even though 30 days is the current legal situation, it is possible that this may be relaxed during the COVID-19 crisis. This means that there may be an additional benefit to come.
Working from home
On another related note, you may already be aware that the working from home allowance in the budget was increased to £6.00 per week. Of course there are rules in place about how this can be claimed. Nevertheless during this period, as the government have mandated that we work from home, HMRC are not going to object to claiming this allowance during the lockdown.
These tax allowances are available for you to claim now. Make sure you don’t lose out. Download our app to up with the latest changes. And talk to us if you need help or are unsure about what to do.