The requirements to complete the burdensome P46 (Car) form have been changed as part of a ‘bumper package to help businesses’ introduced by HM Revenue & Customs (HMRC).

In a move that the Government claims will save businesses £1.1 million per year, employers are now no longer required to complete the quarterly form when one car is replaced with another.

Instead, it will only have to be submitted when an employee is provided the benefit of a company car for the first time or when they cease to have a vehicle.

“By removing the requirement to report such changes on the quarterly return we are easing the administrative burden on employers, resulting in financial savings,” explained a HMRC spokesman.

However, employers must still report the amount of the benefit charge relating to company cars made available to employees on form P11D at the end of the tax year.

P46 (Car) was introduced in 1994/95 so that the benefit could be reported to HMRC fairly soon after it was made available to the employee meaning the correct tax levels could be maintained throughout the financial year.

However, organisations were frustrated at having to effectively provide the same information twice via P46 (Car) and P11D, according to HMRC.

The latest year for which data is available was 2005-06, when HMRC received approximately 400,000 forms P46 (Car).

Of this number, about 43% related to notifications of changes to a company car where one vehicle which attracted car benefit was replaced by another.

In reviewing the form’s future, HMRC considered making no amendment to the reporting requirement, abolishing the P46 (Car) altogether or removing the requirement to send a quarterly return when one car is replaced with another.

By opting to remove the requirement to send in the quarterly return when one car is replaced with another, HMRC claim there will be a “minimal risk” of significant underpayment or overpayment of tax.

The HMRC said further details would be sent to businesses in the next few weeks.