Tax Treatment of Emergency Services Vehicles

PSTAX continues to converse with HMRC about vehicles in the emergency services sector and the inequity in the way those vehicles are treated in comparison to company cars. This inequity is particularly prevalent when considering Ultra-Low Emission Vehicles (‘ULEV’). The current tax treatment of ULEV emergency vehicles seems incongruous next to the treatment of electric company cars, especially considering the Government’s requirement for public bodies to have converted to ULEV by 2030 (in Wales, for example, the target date is as soon as 2025).

The correspondence we have received suggests that HMRC has failed to acknowledge the primary reason for the growing momentum towards electric fleets is due to the Government’s own requirement. This begs the question,

“How does this impact cars provided under S248A (the emergency vehicle tax exemption) and S205 conditions?”

Precedent case law Gurney v Richards means an emergency vehicle cannot be driven by a member of the public and therefore cannot be classed as a company car. Recently, a few of our clients have engineered innovative methods to challenge this case law. We were keen to present these new technologies to HMRC and did so. HMRC’s response suggests that despite the legislation being clear on the ‘meaning of a car’ and ‘unsuitable for private use’, there is interest in opening a dialogue, discussing “new blue light technologies”. On two separate occasions, HMRC has requested further information about our clients’ new technologies and invited PSTAX to submit a clearance request to challenge the current legislation. We will write to HMRC once our clearance request details are completed. During our emergency tax seminar in May, we elaborated on these new technologies and the effect this may have on the wider sector.

Another inequitable area for emergency vehicles is the installation of home charging points. Currently, there is no benefit-in-kind when an employer installs an electric charging point at home for a company car.  However, if the car is subject to tax under S205 then the installation costs would be another cost to be factored into the P11D benefit in kind calculation. If the car is used in accordance with the emergency vehicle exemption, then there is a theoretical benefit based on the one-off cost to the employer of installation and we remain in discussions with HMRC to verify this nuance.

Can vehicles in the emergency sector make use of HMRC’s Advisory fuel rates and advisory electric rates? While recognising the AFR/AERs are set for company cars, they still represent the fuel/electric costs of mileage and blue light cars are still ‘cars’ for all intents and purposes. Discussions with HMRC suggest that emergency service bodies can no longer provide fuel using a fuel card and require reimbursement of the costs of private mileage via an AFR, without fear of triggering an additional S205 benefit.

What effect will this have on organisations and what may be the possible solution?

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Michael Risi

Written by Michael Risi

Michael started his career by joining HMRC in 2014. During his time there, he worked as an integral part of a Debt Recovery team, with particular focus on PAYE. He developed into a coaching and mentoring role, delivering training sessions to new and existing staff through a transitional period.

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