Company Car & Tax Code?

Author
Discussion

Big Tav

Original Poster:

645 posts

164 months

Wednesday 18th November 2015
quotequote all
Hi guys, I have a question for you all about company car tax and a new job. I have been a car salesman for 8 years and always had a company car. My tax code is obviously affected because of that and I use the car to and from work.

I have been offered another job out with the industry as a area manager/sales rep. It comes with a car as it is a 20-30,000 mile a year job and I can work from home. Going to the head office is not required and I only have to do a conference call twice a week.

If I don't use the car for anything other than business miles (I have another car and a bike) do I have to pay company car tax? It's a requirement to use their car for the job but I am not exactly benefiting from it. i would have to pay for fuel then claim the receipts back for all the miles done.

Would I still have a full 1060 tax code or not?

Thanks.

Eric Mc

121,992 posts

265 months

Wednesday 18th November 2015
quotequote all
If the car is based at your home, it is a Company Car. There are very restrictive circumstances where a BIK can be avoided -

Sections 118 and 171(1) ITEPA 2003

Where a car is made available by reason of an employee's employment (see EIM23250 onwards), the legislation provides that it will be automatically treated as having been made available for private use, Section 118(1) ITEPA 2003. This means that a car benefit charge will automatically apply provided the other conditions in Section 114 ITEPA 2003 are satisfied (see EIM23020).

However, there is an escape from this automatic treatment. The car benefit charge will not apply if:

the terms on which the car is made available prohibit private use (EIM23405) and
it is not in fact used privately (EIM23410).
Note that there are two parts to this test, both of which must be satisfied. The mere prohibition of private use is insufficient on its own to prevent a tax charge. It is also necessary to show that a car is not used for private motoring.

Thus a provided car will result in liability even if no private use is made of it unless such private use has been specifically prohibited in advance (precisely because it is available).

Similarly, even if the director or employee shows that private use of a car has been specifically forbidden there must be no private use of it if a charge is to be avoided.

In some cases it will be quite clear from the facts that private use is prohibited and never takes place. However, you may come across cases where it is less clear that the two parts of this test are satisfied. Where you need to give detailed consideration to whether or not the test is satisfied, you need to ascertain:

all the facts surrounding the circumstances of the claimed prohibition and
irrespective of any prohibition, how the car was in fact used.
A key point that you should bear in mind is that it is the tax definition of private use that counts (see EIM23305) and not the employer's. So if the employer bans what it calls private use, but does not include travel between home and the permanent workplace in that ban, the ban will not be effective for tax purposes.

Summary
Both parts of the statutory condition must be satisfied:

there must be an express, legally enforceable ban on private use, and
the taxpayer must be able to demonstrate as a matter of fact that there was no private use.

Big Tav

Original Poster:

645 posts

164 months

Wednesday 18th November 2015
quotequote all
Thanks of that great reply! Looks like I will just be paying the company car tax so I might as well use it a bit on the weekends then.

The job is doing about 30,000 miles a year. I have the option of taking a fuel card or I can put my fuel on my credit card and keep a log book and claim back any personal miles (which wouldn't be much). How can I work out what that tax implication of a fuel card would be?

I think I remember one of my friends having a fuel card when he worked at BMW and he said he was shocked when he saw what the tax was on it.

Any help would be greatly appreciated!

jkh112

21,996 posts

158 months

Thursday 19th November 2015
quotequote all
Comcar website is useful in providing details of impact on pay for company cars and fuel cards etc. Helps greatly in finding the most tax efficient models to choose from.

SidJames

1,399 posts

233 months

Thursday 19th November 2015
quotequote all
I have a fuel card for my company car, and I am based at home. I do very few private miles.

You'll only pay tax on private fuel (I am required to log every trip for business), and HMRC will treat the cost of private fuel as taxable income.

Not much for me, but varies by user.

[edit] yes you will still definately cop for the company car tax! (I used to have a cash allowance of £700 a month to buy and run my own, but changed to a company lease car recently. more expensive tax wise, but less hassle.)


2 sMoKiN bArReLs

30,254 posts

235 months

Thursday 19th November 2015
quotequote all
SidJames said:
I have a fuel card for my company car, and I am based at home. I do very few private miles.

You'll only pay tax on private fuel (I am required to log every trip for business), and HMRC will treat the cost of private fuel as taxable income.

Not much for me, but varies by user.
That's entirely wrong.

In theory you get 1 private mile worth of fuel you cop for a scale charge. It's true you may be able to avoid the scale charge by reimbursing private fuel costs back to the company.



2 sMoKiN bArReLs

30,254 posts

235 months

Thursday 19th November 2015
quotequote all
2 sMoKiN bArReLs said:
SidJames said:
I have a fuel card for my company car, and I am based at home. I do very few private miles.

You'll only pay tax on private fuel (I am required to log every trip for business), and HMRC will treat the cost of private fuel as taxable income.

Not much for me, but varies by user.
That's entirely wrong.

In theory you get 1 private mile worth of fuel you cop for a scale charge. It's true you may be able to avoid the scale charge by reimbursing private fuel costs back to the company.
..which is what you may be trying to say

SidJames

1,399 posts

233 months

Thursday 19th November 2015
quotequote all
2 sMoKiN bArReLs said:
2 sMoKiN bArReLs said:
SidJames said:
I have a fuel card for my company car, and I am based at home. I do very few private miles.

You'll only pay tax on private fuel (I am required to log every trip for business), and HMRC will treat the cost of private fuel as taxable income.

Not much for me, but varies by user.
That's entirely wrong.

In theory you get 1 private mile worth of fuel you cop for a scale charge. It's true you may be able to avoid the scale charge by reimbursing private fuel costs back to the company.
..which is what you may be trying to say
sorry, yes I do. My bad!

TwigtheWonderkid

43,346 posts

150 months

Thursday 19th November 2015
quotequote all
OP, ask your new employer to get their fleet insurer to issue a specified certificate for your company car for business use only, excluding sd&p and excluding commuting. HMRC will accept this as proof of no pleasure use whatsoever and you can therefore avoid BIK.

Eric Mc

121,992 posts

265 months

Friday 20th November 2015
quotequote all
Have they decided then that the "normal commute" is not private use"?

AB

16,975 posts

195 months

Friday 20th November 2015
quotequote all
Eric Mc said:
Have they decided then that the "normal commute" is not private use"?
If you're home based then going into the office counts as business mileage, certainly does for me, and I claim mileage for it.

Not a company car though, took the allowance.

Eric Mc

121,992 posts

265 months

Friday 20th November 2015
quotequote all
AB said:
Eric Mc said:
Have they decided then that the "normal commute" is not private use"?
If you're home based then going into the office counts as business mileage, certainly does for me, and I claim mileage for it.

Not a company car though, took the allowance.
That is indeed true - but establishing that you are genuinely "home based" can be queried and rejected by HMRC. You do have to have cast iron proof that -

a) you really are based in your home

b) that you are so based because it is a requirement of your employment and not just an option you exercised i.e. it wasn't just a matter of choice

2 sMoKiN bArReLs

30,254 posts

235 months

Friday 20th November 2015
quotequote all
Eric Mc said:
AB said:
Eric Mc said:
Have they decided then that the "normal commute" is not private use"?
If you're home based then going into the office counts as business mileage, certainly does for me, and I claim mileage for it.

Not a company car though, took the allowance.
That is indeed true - but establishing that you are genuinely "home based" can be queried and rejected by HMRC. You do have to have cast iron proof that -

a) you really are based in your home

b) that you are so based because it is a requirement of your employment and not just an option you exercised i.e. it wasn't just a matter of choice
and if you spend 40% of your time in one location your journey from home is almost certainly private. (So you can get caught by this in 2 x different locations)