HMRC confirm on Zero Emission Range (ZER)

As you may be aware HMRC issued an Employer Bulletin (Issue 82) last week which included a section regarding the information required for Ultra-Low Emission Vehicles (“ULEVs”), that is cars with emissions between 1 and 50 g/km, to be entered on Form P46 (Car) and when payrolling company cars.

We’ve known since 2017 that from 6 April 2020 the company car tax for these cars will be calculated by reference to their emissions and their zero emission range (“ZER”), that is the maximum distance they can travel in pure electric mode. However, it was only last week that HMRC confirmed that the ZER must be sourced from the car’s Certificate of Conformity (“CoC”), and that leasing companies and other fleet providers will be expected to provide the zero-emission mileage figure to their customers.

HMRC further advised that leasing companies should obtain, and keep, a car’s CoC on purchase. The guidance does not though take into account that, as we have found from discussions with our clients, a CoC is rarely provided to purchasers, that dealers may not even know whether they have received a CoC when a car is delivered nor, if they have received a CoC that they should pass it on to the leasing company.

Having identified a potential problem several months ago regarding the source of a car’s ZER under the new Worldwide Harmonised Light Vehicle Test Procedure (“WLTP”), Tusker entered into correspondence with HMRC to seek clarification. As the only source confirmed to us by HMRC was the CoC, we actually wrote to them shortly before the publication of last week’s Employer Bulletin to ask if other data sources, for example independent industry sources such as cap hpi, could be used, but have yet to receive a reply. In light of the publication of the Employer Bulletin, and having been informed by cap hpi that it should be able to dynamically provide a vehicle specific ZER, Tusker has submitted a follow up query to HMRC and will circulate further information when we have received a response.

For existing ULEV company cars leased beyond 5 April 2020 HMRC’s guidance will ultimately apply to the preparation of P11ds, but customers that have leased these cars and who payroll benefits will need the ZER from as early as 6 April 2020. Pending a decision from HMRC as to whether data may be used from other sources, such as cap hpi, leasing companies and other fleet providers may wish to identify these customers and the cars for which data will be needed by April 2020, so the ZER may be obtained from the dealer/manufacturer who provided the cars.

For cars leased under contracts starting on or after 6 April 2020 leasing companies should ensure that a CoC is provided and retained as a matter of course on purchase to ensure the ZER is readily available and may be given to customers on request.

Tusker will continue to provide P11D reports, where applicable.