Company cars and fuel (Table C)
The basis for taxing company cars and fuel provided for private use is set out in the Table. This has been complicated by a change in the way CO2 emissions are measured: this has led to different rules applying to cars registered before and after 6 April 2020. The taxable benefits will be different for the next two years, after which there will be a single set of rates again. Fully electric cars will give rise to no tax charge in 2020/21, increasing to tax on just 2% of their list price by 2022/23.
There have been other changes to the taxable figures for vans with private use, including removing the charge on electric vans with effect from 6 April 2021.
‘Off payroll’ working
HMRC has been concerned about individuals working through personal service companies (PSCs) for two decades: they regard this as a way of avoiding PAYE and Class 1 NIC where ‘in reality’ (in HMRC’s view) the individual is acting as an employee.
The ‘IR35’ rules required PSCs to pay PAYE and NIC on income from engagements that were effectively employments. From 6 April 2017, where the individual behind the PSC works in the public sector, the responsibility for paying this tax was transferred to the person paying the PSC, and the responsibility for deciding ‘what is effectively employment’ was imposed on the public sector engager. HMRC is convinced that this has reduced non-compliance, and as announced in 2018, will from April 2020 extend the same rules to large and medium-sized employers in the private sector.
This is a very significant and potentially contentious change for all those who work through PSCs and those who use them. It will be important to understand the decisions that have to be made and who has the responsibility for taking them, and what to do if the parties to a contract do not agree about its status.