Quick company car tax question

[BigsimonY]

Ok so im starting a new job. I have been offered a works car or a van. Is it still the case that vans,4x4 pickups are taxed at a far lesser rate than a company car? Dont want to ask my new boss and come across as a div lol.

[Snollygoster]

Far less.

A van has a maximum of a £3,000 annual liability regardless of Co2/P11d etc. So £50/£100 a month.

If you don't use if to personal use (within reason - so the odd trip to the tip/dentist/supermarket is permitted. I believe even doing a daily school run is permitted) and only use it for business and commuting, you do not have to pay any tax what so ever.

Also, "free" company fuel is a lot less of a taxable perk. Can't remember the exact amount though.

[BigsimonY]

yes its a Mondeo estate or a Transit connect! Not sure why they give you a option????? Surely a van is cheaper for everyone ?

[TwigtheWonderkid]

Do you run your own car. And do you need a car? If so, you might be better off taking the Mondeo and flogging your car, despite the higher BIK tax.

[BFG TERRANO]

Snollygoster said:

Far less.

A van has a maximum of a £3,000 annual liability regardless of Co2/P11d etc. So £50/£100 a month.

If you don't use if to personal use (within reason - so the odd trip to the tip/dentist/supermarket is permitted. I believe even doing a daily school run is permitted) and only use it for business and commuting, you do not have to pay any tax what so ever.

Also, "free" company fuel is a lot less of a taxable perk. Can't remember the exact amount though.

Not so. It is strictly business only. Stopping on the way to work for a paper is about all you get away with.

[Sheepshanks]

BFG TERRANO said:

Snollygoster said:

Far less.

A van has a maximum of a £3,000 annual liability regardless of Co2/P11d etc. So £50/£100 a month.

If you don't use if to personal use (within reason - so the odd trip to the tip/dentist/supermarket is permitted. I believe even doing a daily school run is permitted) and only use it for business and commuting, you do not have to pay any tax what so ever.

Also, "free" company fuel is a lot less of a taxable perk. Can't remember the exact amount though.

Not so. It is strictly business only. Stopping on the way to work for a paper is about all you get away with.

...and the tax is based on availability for private use, whether you use it or not. Most employers are reluctant to ban private use as it's difficult to police and they'll get into trouble with HMRC if it's abused.

[TooMany2cvs]

BigsimonY said:

yes its a Mondeo estate or a Transit connect! Not sure why they give you a option????? Surely a van is cheaper for everyone ?

Because some people might be happy to pay the extra tax and have a vehicle they can use as a car, instead of having to have a van AND their own car...?

[BFG TERRANO]

Sheepshanks said:

...and the tax is based on availability for private use, whether you use it or not. Most employers are reluctant to ban private use as it's difficult to police and they'll get into trouble with HMRC if it's abused.

Some can and do opt out. Vehicles are tracked and it's made clear to employees that in an accident they are not insured for private use. The fuel card is a financial killer. Better to buy your own fuel and claim mileage.

[GoneAnon]

The scale charge for vans went up to £3090 in April.

Unless you want a van for personal use, I reckon you would be better off, all things considered, with the Mondeo.

[Pit Pony]

http://www.hmrc.gov.uk/vans/vans-info.pdf

Does that help?

[Snollygoster]

BFG TERRANO said:

Snollygoster said:

Far less.

A van has a maximum of a £3,000 annual liability regardless of Co2/P11d etc. So £50/£100 a month.

If you don't use if to personal use (within reason - so the odd trip to the tip/dentist/supermarket is permitted. I believe even doing a daily school run is permitted) and only use it for business and commuting, you do not have to pay any tax what so ever.

Also, "free" company fuel is a lot less of a taxable perk. Can't remember the exact amount though.

Not so. It is strictly business only. Stopping on the way to work for a paper is about all you get away with.

Oh. I swear this wasn't the case last year. Has this changed with the recent £90 increase?

[Pit Pony]

HMRC said:

Cars or fuel for employees who earn at a rate of less than £8,500 a year

You don’t have to pay or report on any cars or fuel that you provide for these employees, even if they use them for private journeys.

So lets say I employ someone to do my admin at a salary of £8,499 a year, and provide HER with a car, and fuel, and she lets her kids use it too. And I pay the insurance cause she's worth it.

Is that okay then ? Hypothetically, even if the director is married to this person, and the job doesn't really need a car as the business is based in the attic?

[GoneAnon]

Snollygoster said:

BFG TERRANO said:

Snollygoster said:

Far less.

A van has a maximum of a £3,000 annual liability regardless of Co2/P11d etc. So £50/£100 a month.

If you don't use if to personal use (within reason - so the odd trip to the tip/dentist/supermarket is permitted. I believe even doing a daily school run is permitted) and only use it for business and commuting, you do not have to pay any tax what so ever.

Also, "free" company fuel is a lot less of a taxable perk. Can't remember the exact amount though.

Not so. It is strictly business only. Stopping on the way to work for a paper is about all you get away with.

Oh. I swear this wasn't the case last year. Has this changed with the recent £90 increase?

Nope "incidental use" is all that has been allowed since the van BiK was introduced at £3000 years ago. The legislation doesn't define "incidental" but it is generally accepted that an odd trip to the dump would be ok, but theweekly shop would not.

[GoneAnon]

Pit Pony said:

HMRC said:

Cars or fuel for employees who earn at a rate of less than £8,500 a year

You don’t have to pay or report on any cars or fuel that you provide for these employees, even if they use them for private journeys.

So lets say I employ someone to do my admin at a salary of £8,499 a year, and provide HER with a car, and fuel, and she lets her kids use it too. And I pay the insurance cause she's worth it.

Is that okay then ? Hypothetically, even if the director is married to this person, and the job doesn't really need a car as the business is based in the attic?

You could do that, but the value of the car and fuel benefit in kind is added to the salary and taxed.

The director would also have to show that work was being done to justify paying a family member wages and benefits, otherwise this kind of move could be considered tax-devisive and could lead to other questions concerning the tax and finances of the business and the directors.

[Pit Pony]

GoneAnon said:

Pit Pony said:

HMRC said:

Cars or fuel for employees who earn at a rate of less than £8,500 a year

You don’t have to pay or report on any cars or fuel that you provide for these employees, even if they use them for private journeys.

So lets say I employ someone to do my admin at a salary of £8,499 a year, and provide HER with a car, and fuel, and she lets her kids use it too. And I pay the insurance cause she's worth it.

Is that okay then ? Hypothetically, even if the director is married to this person, and the job doesn't really need a car as the business is based in the attic?

You could do that, but the value of the car and fuel benefit in kind is added to the salary and taxed.

The director would also have to show that work was being done to justify paying a family member wages and benefits, otherwise this kind of move could be considered tax-devisive and could lead to other questions concerning the tax and finances of the business and the directors.

I completely agree with the second bit, of that, you need to be able to show what a family member does to justify paying them, but according to the HMRC's own rules, as quoted direct from the direct.gov website, if they earn less than £8500, you don't have to mention a word to the HMRC, so the value of the car and fuel benefit in kind is NOT added to the salary and taxed.

[GoneAnon]

The value of the BiK is considered as earnings, and added to actual wages/salary and takes you over the £8500 threshold.

You could pay them £2000 and a car/fuel worth up to £6499 to keep below the threshold, though, but as you would then be paying employers NICs on the same value, you might prefer to pay them the salary of £8499 and let them buy a better car?

[Pit Pony]

But the way I read the HMRC guidelines, it seems you DON'T have to do anything.

[okie592]

I had the choice too between a golf estate and a caddy van

Chose the golf, it costs me around £45 a month in tax, then 16p per personal mile that I do. Work told hmrc I had the car.