Company Cars – Security Features Not to be Regarded as Accessories

Effective 06 April 2011, where a company car was made available for private use, the £80,000.00 cap was removed for benefit calculations – i.e. the list price plus accessories is no longer capped at £80,000.00.  This will impact our P11D reporting for the tax year 2011/12 in July 2012.  However, the term accessories made no distinction between a set of alloy wheels and a feature which was added for the purposes of providing security – armour plating, bullet-proof glass etc.  The unintended impact of this was that an employee may have an increased taxable benefit as a result of security accessories necessary for his employment.

Draft legislation, effective 06 April 2011, has been introduced which will add the cost of the following features to the section of excluded accessories:

• Armour plating
• Bullet-resistant glass
• Modifications to the car fuel tank, protecting it from explosion
• Any modification or enhancement necessary as a result of having made the previous three features

The legislative change will add Section 125A ‘security features not to be regarded as accessories’ into the Income Taxes (Earnings and Pensions) Act 2003.

Comment

This does ensure that security-enhanced cars, which would have increased the taxable benefit to the employee, can now have these features removed from the benefit calculation.  This is providing the employee is in employment where the features have been fitted because of a threat to their personal security.  We assume that the employer will be able to make this decision on the employee’s behalf.

Further Information

• HM Treasury – Draft Legislation and TIIN