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Do I have to tell HMRC I have a company car – and how do I do it?
If you run a fleet car in the UK you might be tempted to keep quiet about it and just enjoy the financial benefits. That would be both unwise and illegal. Here's how to tell HMRC you have a compa...
Being handed the keys to your new company car is going to bring a certain sense of joy, so why spoil the moment by telling His Majesty’s Revenue and Customs about it?
After all, HMRC will only demand that you pay out more in tax when you could be spending the money on fuel, holidays and days out.
What it doesn’t know won’t harm it, right? Wrong – because when it does find out (as it inevitably will) it could do your finances a great deal of harm.
HMRC demands that your employer notifies it about any company cars that have been made available for personal use, but the law also says it’s ultimately your responsibility to make sure the company has actually done all the paperwork. That’s why it’s best to skip the potential legal ramifications and make sure you know what hoops you’ll need to jump through.
Remember, HMRC has the power to impose heavy fines if you give inaccurate information.
So here’s what to do to keep yourself on the right side of HMRC so you can enjoy your new company car without constantly looking over your shoulder.
How do I tell HMRC I have a company car?
There’s no getting around it – you or your firm's fleet manager will need to fill in some paperwork, although it's of the online variety using HMRC’s PAYE service.
The first task is to complete and submit a P46 (Car) form. It's a catch-all form that you need to fill in when you first get a company car, when you get a replacement car, and when you stop having a company car altogether. If you prefer things old school, you can also fill in the form online, download it, print it and post it in physical form. You can also use HMRC-recognised payroll software.
You must include full details of the car on your end-of-year tax forms too, because you need to work out the tax and National Insurance to pay on the car benefit (and also fuel, if that applies to you).
These rules apply to all fleet cars, even if you happen to run a plug-in hybrid (PHEV) or electric company car.
Read more: How benefit-in-kind (BIK) tax works
How do I tell HMRC I've changed my company car?
Good news! While you need to let HMRC about your new wheels, you don’t need to do so using a new P46 (Car) form. Simply log on to the PAYE Online service or use HMRC-recognised payroll software – it’s easy.
Still think old school also means old’s cool? In that case tell HMRC at the end of the tax year using your end-of-year forms. However, you need to keep note of the day you changed your car so the information you give HMRC is absolutely accurate, or you could be in trouble.
Read more: The cheapest company cars
When do you I NOT need to tell HMRC about a company car?
We’ve spent this entire article telling you that you must tell HMRC about your new company car. But in fact, there are also some occasions when you don’t need to let on.
So if you happen to be an employer that has invested in a few pool cars (cars that employees use for work but that remain overnight at the place of business) there’s no need to tell HMRC. Pool-car rules apply though, so the cars must be used by more than just one staff member.
You don’t need to inform HMRC if you provide an adapted car for a staff member with a disability, or a car for them through the Motability scheme. However, the car must be used for business miles and commuting to and from the place of work. Personal miles are not allowed.
And finally, emergency vehicles used by on-call employees of the emergency services are exempt from HMRC rules.
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