Section F - Cars and Car Fuel - HMRC Averaging for Motor Traders

Modified on Fri, 14 Jan, 2022 at 3:08 PM

The system for charging car benefits based on price and CO2 emissions could mean a considerable amount of record keeping and administrative work where there are very frequent changes of cars, an example being a motor trader or car manufacturer.

HMRC can agree to measures on a case by case basis solely for the purpose of simplifying the calculation of the amount of the car benefit charge (these are not intended to result in a lower tax charge for the employees involved). Therefore in appropriate cases an averaging approach can be applied to the calculation of the car benefit charge. In effect, a single notional car is substituted for the multitude of actual cars available to these particular employees.

The averaging procedure will mainly affect:

Employees in the retail motor trade
Employees in the motor leasing and hiring trades
Other employees in the motor trade who have very frequent changes of cars

The P11D Organiser offers the ability to utilise the averaging scheme as part of the standard software provision by using a car allocation property of 'Cars and Car Fuel - Motor Trade Vehicle'.

When using this functionality the user needs to first define the 'bands' that are in use. Usually a dealer or manufacturer will have an HMRC approved set of vehicle bandings to apply - these are basically vehicles that can be provided to multiple employees at the same time.

An example banding list is provided below:

Description	List Price Bracket	Average Price	Average CO2	Fuel Type	CC	Reg Year
Group 1	£9,000-£12,000	£11,258.96	91	Petrol	2000	01/01/2012
Group 2	£12,001-£17,000	£13,270.97	94	Petrol	2000	01/01/2012
Group 3	£17,001-£23,000	£20,673.78	110	Petrol	2000	01/01/2012
Group 4	£23,001-£31,000	£27,168.87	112	Petrol	2000	01/01/2012
Group 5	£31,001-£40,000	£35,926.86	119	Petrol	2000	01/01/2012

Reporting of ULEV cars from 2020

For car averaging purposes in tax year 2020-2021 onwards any notional CO2 between 1-50g/km will require a zero emission mileage figure. If this scenario applies a default figure of 50 should be entered in the zero emission mileage field when submitting the company car details to HMRC.

These bands will be defined as vehicles that can then be allocated to employees - the vehicles can either be created manually, or imported from a conforming CSV/Excel file. Below is an example of a manual creation:

Once the vehicles are created, these can be allocated to employees, again either manually or via the standard import routines. It is important to remember that these need to be assigned as a 'Cars and Car Fuel - Motor Trade Vehicle' and not a standard company car.

Assigning Manually

Ensure the correct selection is made in the interface:

Assigning via Import

Ensure the correct import routine is selected:

Please note:

Assigning a car as a Motor Trade Vehicle means that the system will no longer check for exclusive use of vehicles (necessary so the same vehicle can be allocated to multiple employees concurrently), however, the system will still check for overlaps/conflicts on an employee level (see the warning below created during a manual assignment).