HM Revenue & Customs (HMRC) is continuing its review of company cars, mileage allowances and Employee Car Ownership Schemes (ECOS) as announced in the recent pre-budget report.
The purpose of this review appears to be to see what further tax can be squeezed out of car taxation and whether employees who take cash instead of cars and claim mileage allowances are actually getting too good a deal.
There is mention of some environmental issues too, because employees own cars tend to have worse emissions figures than newer company provided models.
Since company car benefit rates were increased there has been a noticable decrease in the size of company car fleets, but no actual decrease in the number of business miles travelled. There has also been concern that Authorised Mileage Payments (AMPS), which are tax free may be being abused per se, or used in such a way as to undermine the Chancellors publicised envirommental intentions.
HMRC say that they need to hold discussions with representatives from industry and business, and seek views from a wide range of organisations with an interest in company cars, employee car ownership schemes and mileage allowances.
They are planning to hold meetings in London and Birmingham in early January and they will be seeking answers to the following questions:
1. How many company cars, ECOS and cash allowances do you have in your fleet?
2. Do you offer your employees a cash alternative to a company car? If so, is a condition of the allowance that it should be used to purchase a car? Can your employees choose whether to take a company car or the cash alternative or do you impose conditions on this choice, if so what are they?
3. If you offer a cash allowance, how much do you offer and how does this compare to the list price of the company car the employee would have otherwise received?
4. If your employees choose to buy a car with their cash allowance do you know the fuel type and emissions of the car? Please provide specific details if possible.
5. Do the following types of employees use their cars for business travel and how much business travel do they do per year? a. employees with ECOS cars b. employees with cash allowances c. employees with neither an ECOS car nor cash allowance d. employees with company cars
6. Do you pay mileage allowances to other employees who do not have either a cash allowance or an ECOS car?
7. What rate of mileage allowances do you pay your employees and how did you arrive at this amount? Please provide specific details if the rates vary for different types of employee.
8. How do you pay your employees mileage allowance? Do you reimburse business mileage actually driven by the employee; pay on the basis of estimates or pay business mileage in advance and reconcile at the year end? Please provide specific details if the method varies for different types of employee.
9. Do your employees think that the current approved mileage allowance rates (AMAPs)are generous, and what motoring costs do they take into account when they consider this?
10. Does your company provide fuel for private use for: a. employees with company cars? b. employees with ECOS cars? c. employees with a cash allowance? d. employees who do not fall into categories a – c above?