The HMRC has issued guidance on how to treat Benefit in Kind (BiK) tax during the COVID-19 lockdown. The new guidance clarifies the situation for company car drivers that are currently furloughed or working from home.
The HMRC states that employers should treat the car as being made ‘available for private use’ during this period even if your employee is instructed to not use the car or unable to physically to return the car.
The HMRC will accept that a company car is unavailable in the following circumstances:
- Where the contract has terminated and the keys returned to the employer or third party.
- Where the contract has not been terminated – 30 days after the keys have been returned to the employer or to a third party as instructed by the employer
The return of keys means that a car cannot be driven in any circumstances even if it is still in the possession of your employee. As long as your employee continues to have no access to the keys until the car is collected from them, HMRC will still regard the car as being unavailable.