Income Tax: benefits in kind for car data reporting requirements
Published 21 December 2017
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This publication is available at https://www.gov.uk/government/publications/income-tax-benefits-in-kind-for-car-data-reporting-requirements/income-tax-benefits-in-kind-for-car-data-reporting-requirements
Who is likely to be affected
Employers, payroll providers and payroll software providers.
General description of the measure
The measure will introduce a Statutory Instrument to change the Pay As You Earn (PAYE) regulations to provide for employers to report car data in respect of cars provided as benefits in kind (BiKs) where the employer chooses to voluntarily payroll the benefit.
Policy objective
Car and car fuel data is essential for the maintenance and development of government policy relating to the taxation of company cars. It is used to provide advice to Ministers on the predicted impact on public finances of policy decisions and in HM Revenue and Customs’ (HMRC) compliance activities.
Background to the measure
Where employers provide their employees with BiKs they are required to report the details after the end of the tax year on Form P11D.This includes information about the type of benefit as well as the taxable amount. Since April 2016 employers have been allowed to choose to tax most BiKs through their payroll in real time removing the need to submit a P11D. As HMRC still needs car data legislative change was required to provide employers with a route to submit this information.
When draft legislation for voluntary payrolling was published for consultation in July 2015, HMRC advised that additional reporting requirements relating to car and car fuel benefit would be introduced for employers choosing to payroll these benefits from April 2017.
Employer representatives raised concerns about potential administrative burdens and employer readiness so HMRC obtained Ministerial agreement to defer the implementation until April 2018.
Detailed proposal
Operative date
The measure will have effect on and after 6 April 2018.
Current law
Part 4 Chapter 2 of the Income Tax (PAYE) Regulations 2003 (2003/2682) contains a requirement at Regulation 87 and 90 for employers to send information about car and car fuel benefits provided to employees. This is in respect of employers who send HMRC an annual return under Regulation 85.
Proposed revisions
A Statutory Instrument will be laid in December 2017 to amend the PAYE regulations, from April 2018, to provide for the reporting of company car information where employers are payrolling the car and car fuel benefits in kind. The changes will state what information employers are required to report and how they will submit it to HMRC.
Summary of impacts
Exchequer impact (£million)
| 2017 to 2018 | 2018 to 2019 | 2019 to 2020 | 2020 to 2021 | 2021 to 2022 | 2022 to 2023 |
|---|---|---|---|---|---|
| - | nil | nil | nil | nil | nil |
This measure is not expected to have an Exchequer impact.
Economic impact
This measure is not expected to have any economic impacts.
Impact on individuals, households and families
The car data reporting requirements have no impact on individuals as they only affect employers.
The measure is not expected to impact on family formation, stability or breakdown.
Equalities impacts
It is not anticipated that this measure will impact on any group with protected characteristics.
Impact on business including civil society organisations
This measure will affect employers who payroll company car benefits in kind (BiKs).
Anticipated ongoing burdens arise from these employers being required to report details of company cars on the first payment submission in the tax year and in subsequent payment submissions only if there is a change to the company car benefit provided (for example it ceases, or a new car is provided). In total HMRC anticipates ongoing costs to employers will amount to £1.3 million per annum.
Anticipated one-off burdens arise from familiarisation with the change in rules. These costs are expected to be negligible.
Estimates of compliance costs are shown in the following table:
Estimated one-off impact on administrative burden (£million)
| One-off impact | (£million) |
|---|---|
| Costs | negligible |
| Savings | - |
Estimated ongoing impact on administrative burden (£million)
| Ongoing average annual impact | (£million) |
|---|---|
| Costs | 1.3 |
| Savings | - |
| Net impact on annual administrative burden | +1.3 |
Operational impact (£million) (HMRC or other)
The additional costs and savings for HMRC in implementing this change are anticipated to be negligible.
Other impacts
Other impacts have been considered and none have been identified.
Monitoring and evaluation
This measure will be kept under review through communication with affected taxpayer groups.
Further advice
If you have any questions about this change, please email: PAYE.policy@hmrc.gov.uk.
Declaration
Mel Stride MP, Financial Secretary to the Treasury, has read this tax information and impact note and is satisfied that, given the available evidence, it represents a reasonable view of the likely costs, benefits and impacts of the measure.