09 May Cars and Payroll – What do you need to do?
Payroll & Company Cars
P11Ds and Cars
It is important that you report all of the information regarding cars, and to do so correctly.
Incorrect or incomplete reporting means:
- as a business you will pay the wrong amount of National Insurance Contributions
- your employee’s will pay the wrong amount of tax, and
- you will need to amend each incomplete or incorrect P11D.
Common mistakes include submitting the wrong CO2 emissions, not including accessories and incorrectly recording capital contributions and private use payments.
The diesel supplement for company cars from 6 April 2018 and the introduction of the Real Driving Emissions 2 (RDE2) standard
From 6 April 2018, the diesel supplement, relating to the car benefit and the car fuel benefit charge increased from 3% to 4% for all diesel cars that are not certified to meet the RDE2 standard.
The Certificate of Conformity available from the manufacturer will confirm whether the car is RDE2 (also known as Euro 6d) compliant. Although it is not expected that there will be any cars on the market that meet the RDE2 standard prior to 2019/20, there may be a few.
The diesel supplement will continue to apply to those cars propelled solely by diesel (not diesel hybrids) and registered on or after 1 January 1998, which do not have a registered Nitrogen Oxide (NOx) emissions value.
It will also apply to models registered on or after 1 January 1998, which have a registered NOx emissions value that exceeds the RDE2 standard.
From 6 April 2018, if the diesel company car is RDE2(Euro 6d) compliant, the diesel supplement must not be applied when calculating the car benefit and car fuel benefit charge.
For the tax year 2018 to 2019 only:
- use the appropriate percentage for ‘Fuel Type A – All other cars’ when calculating the cash equivalent for diesel company cars which are RDE2(Euro 6d) compliant
- use ‘Fuel Type A – All other cars’ when reporting diesel company cars which are RDE2(Euro 6d) compliant.
If your client has registered to payroll the car and car fuel benefit charge for an RDE2 (Euro 6d) compliant diesel car:
- calculate the cash equivalent using the appropriate percentage for ‘Fuel Type A’ and
- enter this amount in ‘Box 182’ of the Full Payment Submission (FPS)
- enter ‘A’ in ‘Box 177’ of the FPS.
All this looks very complicated but is an integral part of employing people. Making sure you get the information correct that you send to HMRC will avoid unnecessary penalities.