Company Car Emissions Tax Change (P11D)

HMRC have recently released an article on company car changes which is worth noting for the upcoming 2020/21 P11D season.

Here’s what they said…

Company car changes for P11D: ULEV and WLTP

Ultra-Low Emission Vehicles

To support the government’s commitment to improving air quality in towns and cities; we are improving the car and car fuel benefit calculation.

On 6 April 2020, we introduced 11 new bands for ultra-low emission vehicles (ULEVs) including a separate zero emissions band.

If a car has a CO2 emission figure of 1-50g/km you will now need to provide the car’s zero emission mileage. This is the distance that the car can travel in miles on a single electric charge.

Worldwide Harmonised Light Vehicle Test Procedure (WLTP)

In 2017, the government announced that it will replace the system for measuring car emissions for the purposes of calculating company car tax and vehicle exercise duty with the implementation of the new testing regime, the Worldwide Harmonised Light Vehicle Test Procedure (WLTP). WLTP aims to be more representative of real-world driving conditions.

Following a review which reported in July 2019, the government confirmed that new cars first registered from 6 April 2020 will use CO2 emission figures based on WLTP. Cars registered prior to 6 April 2020 will use CO2 emission figures based on the current testing regime, New European Driving Cycle (NEDC).

The appropriate percentage bands for 2020/2021 can be found in the Employment Income Manual.

How this affects you

There will be no change to the way you currently report your Company Car Tax data. However, you may need to provide additional information on the P11D.

Completing section F on a P11D for the 2020 to 2021 tax year

From 6 April 2021 a new zero emission mileage field will be shown on the P11D form. If a car has a CO2 emission figure of 1-50g/km you will now need to provide the car’s zero emission mileage. This is the maximum distance in miles that the hybrid car can be driven in electric mode without recharging the battery.

1. The online P11D will be updated with the changes. For paper P11D submissions you will need to ensure you complete the latest version as historic copies may not include the new zero emission mileage field. These will be available through your established method from 6 April 2021.
2. From 6 April 2021 it will be mandatory to provide the date a car is first registered. A new field will be available to enter this information.

Where to find the additional information

Zero emission mileage.

If you are leasing the vehicle, you should obtain this new data item in the same way you currently receive your Company Car Tax reporting data from the car leasing firm or fleet provider.

If, in extreme circumstances this information is not available, you can obtain the zero emission mileage figure via the car’s manufacturer.

If you own the vehicle, the zero emission mileage figure can be found on your vehicle’s Certificate of Conformity (CoC).

The zero emission mileage maybe displayed as ‘electric range’ on the CoC:

• for hybrid cars registered before 6 April 2020 (NEDC) the ‘electric range’ within section 49.2 on the CoC should be used
• for hybrid cars registered from 6 April 2020 (WLTP) the ‘electric range (EAER)’ within section 49.5.2 on the CoC should be used
• this may also be referred to as combined or equivalent AER (EAER) combined

If the zero emission mileage figure is displayed on the CoC in kilometres, you will need to convert the figure into miles and round up to the nearest mile before updating this field on the P11D.

Failure to obtain the data via the correct source could lead to incorrect company car benefit in kind being calculated.

Date first registered

The car’s date first registered can be obtained through the car leasing firm or fleet provider. The information is also available on the car’s logbook (V5C).

Car Averaging

For car averaging purposes in tax year 2020 to 2021 onwards any notional CO2 between 1-50g/km will require a zero emission mileage figure. If this scenario applies, a default figure of 50 should be entered in the zero emission mileage field when submitting the company car details to HMRC.

For help or support with all your tax questions please get in touch with Maxine McIntosh or fill out the form below and we will be in touch.