Ford Management Role Cars and HMRC

Ford Management Role Cars and HMRC

Author
Discussion

Extra 300 Driver

Original Poster:

5,281 posts

245 months

Monday 24th October 2016
quotequote all
markoc said:
Ford make cars, their managers get a good car benefit. Go figure.
Yes they do, but I am interested in HOW they get it. How do they not have to pay TAX on it?

mk2driver

167 posts

115 months

Monday 24th October 2016
quotequote all
I believe the vehicles are sold to the employee through way of a loan given by the company.

As they manufacture the cars the sold value to the employee is way below the RRP but above cost price to make.

As part of this finance agreement the vehicle is also maintained and insured, similar to deals you can get as a member of the public like Peugeots just add fuel deals.

Vehicle is then handed back in x months with the employee having covered the depreciation etc.

To me it is essentially a PCP deal with a short term, good GMFV and low initial sale price meaning the employee does not pay much per month.

A lot of OEM's do the same thing

ruggedscotty

5,606 posts

208 months

Monday 24th October 2016
quotequote all
they nt sell the car to the employee. Ford own the car. then they sell it on afterwards.

if I worked for Ford and they told me that I had to buy a car from them id be telling them to foxtrot Oscar.

SpeckledJim

31,608 posts

252 months

Monday 24th October 2016
quotequote all
Extra 300 Driver said:
markoc said:
Ford make cars, their managers get a good car benefit. Go figure.
Yes they do, but I am interested in HOW they get it. How do they not have to pay TAX on it?
I commend you on your patience with the 75% of posters in this thread who haven't understood your question but are desperately trying trying to shoe-horn some kind of dig at you.

In answer to your question, I don't know, but it is not unique to Ford. VW Group have some kind of arrangement where their staff are responsible for a small part of the upkeep of the car, and somehow that keeps their BIK very, very low.

I don't think it's fair, but a bit of a side-door deal done with HMRC. Why HMRC allow it I have no idea.

Edited by SpeckledJim on Monday 24th October 16:00

ruggedscotty

5,606 posts

208 months

Monday 24th October 2016
quotequote all
sour grapes ?

it is not the employees car they don't own it. The company gives it to them through an employee option. they get it as they work at ford - there are other places that people work that get benefits.

worked for a bank so got free banking and cheaper financial products etc. so why not if you work for ford do you not get a cheap car etc ? work for sky you get free sky !

travel agents ? cheap air travel, airlines free upgrades to 1st class etc....

yadda yadda

alock

4,224 posts

210 months

Monday 24th October 2016
quotequote all
Extra 300 Driver said:
Yes they do, but I am interested in HOW they get it. How do they not have to pay TAX on it?
Is staff discount subjected to BIK tax?

e.g.
£20k car depreciates by £2k over 3 months. Normal punter would need to cover £2k depreciation and interest on £18k.
Employees get 10% staff discount on new purchase. Employee therefore only needs to cover interest on £18k.

Extra 300 Driver

Original Poster:

5,281 posts

245 months

Monday 24th October 2016
quotequote all
alock said:
Is staff discount subjected to BIK tax?

e.g.
£20k car depreciates by £2k over 3 months. Normal punter would need to cover £2k depreciation and interest on £18k.
Employees get 10% staff discount on new purchase. Employee therefore only needs to cover interest on £18k.
ok ok, making more sense now

Fast Bug

11,598 posts

160 months

Monday 24th October 2016
quotequote all
Pretty sure every manufacturer does this. At FIAT I paid 1% of the list price per month for any FIAT or Alfa Romeo, so I had my company car, and my good lady had a 500 that cost me £100 a month which included everything bar fuel which was changed every 6 or 9 months. Both my last and current work run similar schemes, although my company car is included. Car is registered in my name c/o manufacturer and I sign an interest free loan agreement for each car.

It's no cloak and dagger thing, just the way a company look after their staff, much like Tesco give 10% discount smile

Dan_1981

17,353 posts

198 months

Monday 24th October 2016
quotequote all
Identical to the scheme offered to the JLR management. (same role titles too - leftover from the Ford days)

Entry level gets access to XE / XF / Disco / Disco sport and some Ford models.

Next level up also get the option for RRS.

Fully maintained & insured - replaced every 4 - 6 months.

Salary sacrifice, before tax of a much reduced rate - I couldn't lease / run a Focus for the same price as they pay for a maintained JLR product.

No BIK impact to the employee. (or his her partner in some cases where two cars are provided)


schmunk

4,399 posts

124 months

Monday 24th October 2016
quotequote all
There will be some arrangement such that these are not "company cars", thus avoiding the normal BIK based on CO2 and list price. Instead, it will be some kind of purchase or lease arrangement.

The much reduced cost to the employee against retail purchase/leasing will have been agreed with HMRC as being at a price sufficient that it covers Ford's marginal cost of producing that car (presumably including expected resale value) so that effectively there is no cost to Ford of providing this benefit to the employee and thus no taxable benefit. The leading case law covering this is Pepper v Hart.

If your employer makes widgets, or provides trombone polishing services, they can provide you with widgets or a shined-up trombone at (a reasonable estimate of) the marginal cost of doing so - it's not special to Ford.

Edit: Alock (above) has the right idea.

Dan_1981

17,353 posts

198 months

Monday 24th October 2016
quotequote all

akadk

1,478 posts

178 months

Monday 24th October 2016
quotequote all
a lot of wrongs in the thread

as said

its ECO

employee car ownership

as said, effectively is a PCP

car is sold to the employee at a really low price

consideration to Ford is via their finance partner who loan the money to the employee at zero interest

the term is really short

the GFV is the original sales price

the employee hands back the car at end of term to settle the loan

monthly payments via salary cover the insurance & maintenance side.

there is a BIK liability for the interest free loan as that is technically the only benefit here from HMRC's perspective

the employee does OWN the car, but its registered to the OEM

the JLR scheme isn't at zero interest, so the monthly salary deductions are higher as they charge interest on the loan, which effectively means there's no BIK liability as they are paying it monthly

akadk

1,478 posts

178 months

JungleJim

2,336 posts

211 months

Monday 24th October 2016
quotequote all
my old man is a ford pensioner, used to have two cars on the scheme, but now only allowed one as he's retired.

he's always referred to the cars as 'lease cars'

Butter Face

30,192 posts

159 months

Monday 24th October 2016
quotequote all
I have 2 cars on 6 month deals from the manufacturer I work with, they are on credit sale agreements with a figure that the dealership buys the car at the end of the agreement.

I lay under £400pm for two brand new cars (with RRP about £42k combined) and don't have the pay any BIK or anything apart from insuring the vehicles.

I expect the OP's friend has a similar kind of deal.

ruggedscotty

5,606 posts

208 months

Monday 24th October 2016
quotequote all
Right

You work for Ford and you get a car through ford you do not own the car - the car stays owned by ford. THIS IS FACT. its part of the 'perk'
Its a direct from the manufacturer thing.

Its been explained how it works and how its done - costs of car resale price and all that contrive to make the car cost next to nothing over the period.

no tax implication to the employee. its just something that the manufacturer can do.

Big thing is you have to be employed by ford direct not a supplier or a dealer etc.

If you are employed by a dealer then different ways can be put in place to enable cheap car use - you lease the car for a short term and cycle through the cars etc, would be different to the ford employee though.

Its the way its done, HMRC will only be interested if the car depreciates enough to be an effective cost on ford ie the employee is getting a perk.

akadk

1,478 posts

178 months

Monday 24th October 2016
quotequote all
ruggedscotty said:
Right

You work for Ford and you get a car through ford you do not own the car - the car stays owned by ford. THIS IS FACT. its part of the 'perk'
The only fact here is the fact you are wrong

THIS IS FACT

What part of ECO scheme did you not understand?

.... Oh, the last word.


HOW IT WORKS

ECO schemes entail employers offering employees a monthly salary allowance to spend on a car of their choice. This allowance is generally based on the employee's grade, tax bracket and annual business mileage.

Vehicles within an ECO scheme are sold directly to employees through a credit sale agreement, with contract terms and mileage limits to suit them. Employees do not pay BIK tax, as is usually required within a traditional company car scheme. Rather, they make a personal contribution to the vehicle via payments deducted directly from their salary each month. As part of this payment, insurance, accident and breakdown cover and servicing of the vehicle are included.

Because employees legally own the vehicle, your company may benefit from the tax-efficient nature of business mileage reimbursement on privately owned vehicles, as well as making company car tax and NIC savings. For companies who have a large field-based workforce with high business mileage, the savings under an ECO scheme can be sizeable.

Ilovejapcrap

3,274 posts

111 months

Monday 24th October 2016
quotequote all


OP this reads a little like your jealous of your mate TBH.

He works for a massive car manufacturer of course they are going to end up driving the cars.

It's so ford can flog as second hand almost new, the end.

ruggedscotty

5,606 posts

208 months

Tuesday 25th October 2016
quotequote all
working as an employee but no entitlement to a manager grade car....

An employee discount scheme by all intensive purposes.

http://www.ford.co.uk/Hidden/FordPrivilege/Program...

How you and your family can benefit from Ford Privilege
As a Ford employee, pensioner or beneficiary, you and your family can benefit from the company’s Ford Privilege scheme, which allows you to purchase Ford vehicles at a greatly reduced price.

So how does the scheme work? As an employee of Ford Motor Company Limited, or an associate company, you can buy up to 5 Ford vehicles within a 9-month period under the Ford Privilege scheme.

How much can I save?
Download a list of all Ford Privilege (including Ambassador Programme) discounts

How do I go about it?
To make a purchase under the Ford Privilege scheme you first need to register your intent to use your Ford Privilege entitlement. You can do this by contacting the Ford Privilege Helpline on 08457 100 400 between the hours of 08.30 and 16.45, Monday to Friday, or contact your Ford Dealer for a brochure.

You will need to provide your Company Identification Number and some personal details, for security reasons.

As well as signing you up for the service, the Ford Privilege Helpline can also update you on the latest Ford Privilege marketing offers and prices.
Who can benefit?
A full list of eligible family members is below.
•Grandfather / Grandmother
•Grandson / Granddaughter
•Father / Mother
•Brother / Sister
•Son / Daughter
•Spouse / Partner
•Uncle / Aunt
•Nephew / Niece
•Father-in-law / Mother-in-law
•Step father / Step mother
•Step son / Step daughter
•Son-in-law / Daughter-in-law
•Brother-in-law / Sister-in-law
•Half brother / Half sister
•Step brother / Step sister
More Information
If you have any questions relating to the scheme please do not hesitate to contact the Ford Privilege Helpline on 08457 100 400 between 08.30 and 16.45, Monday to Friday, or contact your Ford Dealer for a brochure.

Working as a manager is different - you get the use of a car, and this car is exchanged on a regular basis. You don't own it and it is not yours other than you get to drive it. Does that make sense ?

98elise

26,381 posts

160 months

Tuesday 25th October 2016
quotequote all
Extra 300 Driver said:
markoc said:
Ford make cars, their managers get a good car benefit. Go figure.
Yes they do, but I am interested in HOW they get it. How do they not have to pay TAX on it?
I suspect its to do with the fact that its their product.

As an example I understand it rail employees get free travel and don't pay much tax on it, if anything at all. They have agreed with HMRC that the actual cost to the rail company is very small.

I also know that airlines do very cheap, or even free holiday travel for employees, however its on the understanding that you may get bumped from the flight etc. Essentially you are using any spare seats. Again they have probably have an agreement with HMRC as I'm not aware thay they are taxed on the flights.

I assume FMC have a similar arrangement where may be they have proven to HMRC that they are say offering cars to staff at cost, but selling them on at over cost in a short space of time. It might be cars that they have an over supply on etc.

It seems reasonable that staff get discounts and deals that are not available to the general public, hence the BIK could be treated differently.