AFP wants HMRC to update company car tax ‘available to use’ rule

HMRC rules for company car tax, based on a vehicle being available for private use, should be changed, according to the Association of Fleet Professionals (AFP).

The fleet representative and training body is calling for the ‘available to use’ rule to be updated in a new 13-point fleet manifesto published today (Wednesday, April 14).

In the manifesto, the AFP states that current HMRC rules for benefit in kind (BIK) taxation on company cars creates ‘two major problems’ amid changing vehicle usage patterns, including limiting the progress of employers offering car clubs and expensive key losses in practice – when keys are returned to the employer in order to prove no private use has taken place.

The AFP recommends, to make car clubs practicable, the company car should be used by the employee for private use at either no cost or at marginal cost (i.e. when the vehicle cost per day is lower than fair market value) and technological solutions should be used to prove no vehicle use.

The AFP also calls for a ‘clear definition’ of occasional private use which is applied by HMRC to company vehicles, as having no firm definition can lead to ‘confusion’ and ‘inconsistency’. In the manifesto, the AFP recommends that less than 1,000 miles per annum would be a ‘fair’ and ‘effective’ level of occasional private use.

The home working definition and concessions should also be standardised and extended, according to the AFP.

Paul Hollick, chair of the Association of Fleet Professionals (AFP), said: “A key element of the thinking behind the formation of the AFP just over a year ago was the need for an effective and engaged campaigning fleet industry organisation and the tax manifesto is really the first signs of that intention.

“We’ve been having wide-ranging discussions with our members and other interested parties about areas where we believe that the taxation of fleets and mobility needs changing or developing to create effective incentives, greater certainty and more fairness.

“The results, which we believe are constructive, realistic and thought-provoking, are contained in this document. We plan to use it as the foundation for our conversations with the Government and HMRC in the coming months and years.”

Hollick said most of the points in the manifesto are related to the changing shape of the fleet sector, especially surrounding the electrification of the car and van parcs, and the move towards mobility. He added, it is in these areas where government policy and HMRC implementations often ‘lag behind’ the issues that AFP members face.

He said: “Of the 13 points, several could be implemented very easily indeed, almost at the stroke of a pen. Others, such as the need for discussions around a road tolling plan, are very much strategic and part of longer-term shifts in policy.

“What we hope to see now is the Tax Manifesto 2021 considered across the fleet and mobility sectors and to hear the reaction from all parties who have an interest. It is by no means a fixed document and we are very much open to further ideas and refinements.”

The 13 points in the tax manifesto are:

1. Benefit in kind (BIK) taxation tables until 2029/30 are needed to meet electric vehicle (EV) targets

2. Clean Air Zones (CAZs) should be co-ordinated nationally

3. The “available to use” rule needs updating

4. A clear definition of occasional private use is required

5. Home working definition and concessions should be extended

6. Road tolling needs to be clearly signposted

7. Parking costs should be linked to shared mobility and public transport solutions

8. Inner city parking needs to be improved

9. Tax breaks are needed for employees taking a mobility solution

10. …and for shared and low carbon mobility

11. Higher taxes on older vehicles may be justified

12. Clear signposting of EV initiatives is required

13. A national kerbside charging strategy is essential

Copies of the Tax Manifesto 2021 can be obtained by e-mailing administration@theafp.co.uk.