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On 13 December 2010, HMRC published a fourth consultation document to obtain views on the transfer of a number of Extra-Statutory Concessions (ESCs) into legislation.  The purpose of the consultation is to ensure that the draft legislation successfully preserves the current tax treatment under the ESCs concerned.

Only one of the seven ESCs presently under consideration is relevant to payroll.  A current concession, detailed on page 25200 of the Employment Income Manual, provides for the tax liability on a company car that is shared by two or more employees to be apportioned on a “just and reasonable” basis.

The draft legislation provides that

1. where a car is shared, its cash equivalent is calculated in the same way as any other employer-provided car, and,
2. at step 7, the provisional sum is reduced on a just and reasonable basis before any deductions in respect of private use payments are made.

Comments on the draft legislation are sought by 7 March 2011.

Further information:

Extra statutory concessions – fourth technical consultation on draft legislation

Car benefit calculation Step 7A: shared car

Related posts:

1. Company Cars – Online reporting of replacement cars from 2011
2. Company Cars – Car provided for lower-paid employees
3. Extra-statutory Concessions – Consultation on conversion of some ESCs to legislation
4. Company Cars and Vans – Car benefit charge

Tags: cars and fuel, Recent Payroll News, travel, Use of company cars

This entry was posted on Friday, December 17th, 2010 at 16:18 and is filed under benefits, uk. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.