Tax exemption for security enhanced cars

The cash equivalent for company cars that is declared on the P11D form is based on many factors, the prime one being the price for tax purposes. This price was capped at £80,000 in years prior to 2011/12.

From 6th April 2011 this upper price cap of £80,000 was removed. This was bad news for those employees lucky enough to enjoy the benefit of very expensive cars such as Ferraris and Lamborghinis.

However employees who are in high-risk jobs and who have been provided with security enhanced cars for their safety may well have been disadvantaged. The cost of implementing security measures such as bullet proof glass & car armour would in most instances exceed the previous £80,000 upper price cap.

For this reason the Government has amended Section 125 ITEPA 2003 to classify the following as excluded accessories: –

• Armour designed to protect the car’s occupants from explosions or gunfire;
• Bullet-resistant glass;
• Any modifications to the car’s fuel tank designed to protect the tank’s contents from explosions or gunfire (including by making the tank self-sealing); and,
• Any modification made to the car in consequence of anything which is a relevant security feature by virtue of the proceeding three examples.

Of course to qualify for this exemption employers need to demonstrate that the employee concerned has a particular threat to their personal security as a nature of their employment.

For more information on security enhanced cars view HMRC’s guidance on this matter.