Do you pay BIK on hire cars?
Discussion
Firstly apologies if this is wrong section but I couldn’t find an appropriate alternative.
My wife has a new job which comes with a company car as it’s essential for the role (no cash alternative, just the car).
She going to spec and order a hybrid car to keep the BIK down but it’s going to be months before it arrives. In the mean time the company are going to get her a hire car (a proper hire car from Enterprise or the likes, not a lease car).
The hire car will not be hybrid and have a much higher co2 rating. My question is around BIK. Will she have to declare the hire car and pay BIK on it or will she not have to start paying BIK until her company car is built?
Anyone have such experience? Many thanks in advance.
My wife has a new job which comes with a company car as it’s essential for the role (no cash alternative, just the car).
She going to spec and order a hybrid car to keep the BIK down but it’s going to be months before it arrives. In the mean time the company are going to get her a hire car (a proper hire car from Enterprise or the likes, not a lease car).
The hire car will not be hybrid and have a much higher co2 rating. My question is around BIK. Will she have to declare the hire car and pay BIK on it or will she not have to start paying BIK until her company car is built?
Anyone have such experience? Many thanks in advance.
Short answer is yes. I was in the same situation as your wife when I started with my current employer in July last year. No pool cars available and covid meant that almost the entire fleet services team was on furlough and ordering a car was impossible.
Be sure to specify with the hire car company your exact requirements or ask the fleet dept ensure that the hire is equivalent to the awarded company car grade or you will end up with a Vauxhall Corsa or some other POS. It's worth asking the hire co when they call to confirm delivery what car is being provided (you can check C02 emissions values on the web while on the phone) and compare that with the gov website BIK calculator. There's normally scope to change to another vehicle in the same class with a kinder BIK rate if you ask nicely.
Also worth checking and logging the car provided on the gov company car registration website. My employer incorrectly declared that I was driving a £56k Audi estate for the entire 8 month rental period which meant I had an unexpected massive tax bill a few weeks back. I've since corrected that myself but I don't 100% trust that HMRC have completely corrected my tax code to suit.
Be sure to specify with the hire car company your exact requirements or ask the fleet dept ensure that the hire is equivalent to the awarded company car grade or you will end up with a Vauxhall Corsa or some other POS. It's worth asking the hire co when they call to confirm delivery what car is being provided (you can check C02 emissions values on the web while on the phone) and compare that with the gov website BIK calculator. There's normally scope to change to another vehicle in the same class with a kinder BIK rate if you ask nicely.
Also worth checking and logging the car provided on the gov company car registration website. My employer incorrectly declared that I was driving a £56k Audi estate for the entire 8 month rental period which meant I had an unexpected massive tax bill a few weeks back. I've since corrected that myself but I don't 100% trust that HMRC have completely corrected my tax code to suit.
voram said:
If a car is "provided" to you that's what triggers BIK. Whether it's been bought, borrowed, leased, hired or stolen makes no difference.
Hmm. I don't owe BIK when I hire a car from Enterprise.OP, could your missus ask if she hires, could the employer pay her back, and avoid any extended rental periods that might fall foul? Maybe Mon-Fri hire, with drops offs. Would be exciting to see what they leave
randlemarcus said:
Hmm. I don't owe BIK when I hire a car from Enterprise.
OP, could your missus ask if she hires, could the employer pay her back, and avoid any extended rental periods that might fall foul? Maybe Mon-Fri hire, with drops offs. Would be exciting to see what they leave
If its anything like what I experienced, it will be two grades above what she ordered and a pile of six month old cars on the drive. OP, could your missus ask if she hires, could the employer pay her back, and avoid any extended rental periods that might fall foul? Maybe Mon-Fri hire, with drops offs. Would be exciting to see what they leave
IJWS15 said:
private use, including commuting, triggers BIK taxation.
This.It depends how the hire works as to how much your wife gets hit with this, IME.
If they give her one car for the entire period, it's fairly easy - she'll take BIK on that car that's provided to her.
In this case, you need to be on to the fleet department to get the hire company to supply a suitable car that's not going to sting her BIK-wise.
In some situations, you'll get a car for a few weeks that is collected and another provided. This can be for a variety of reasons - mileage limits being one of them.
If your car keeps changing regularly, I think they take an assumption of the sort of car you'll get and tax you on that.
For example, a former colleague used to work managing a hire car centre, so his company car was whatever was free at the end of the day in the car park to take home.
Being as his car was always changing, HMRC taxed him on an assumed car of £x list price and a 1.6 litre petrol engine.
Didn't stop him going over to the premium section of the car park at the end of the day and taking whichever Mercedes/BMW he fancied though
IJWS15 said:
private use, including commuting, triggers BIK taxation.
Yes, this exactly. The provision of a vehicle to an individual supplied to their home address and available/insured/covered for incidental personal use (unless it is I believe a van of certain criteria with minimun xxxkg payload use solely for business use), will trigger BIK - regardless if that is your choice or not.This got really quite interesting when 20 or so colleagues from the Surrey office of an engineering consultant I was working for were effectively forced to work at a rural client site in Hampshire for a number of years(!), where they would also be provided with accommodation on a Monday to Friday basis. (Note: no public transport to/from the site to get to hotels etc, hence the cars)
A number of them didn't own their own vehicles and/or couldn't take their sole family vehicle away for 5 day periods and were supplied with long term Enterprise rental cars to facilitate the commute from their homes to the Berkshire site on a Monday and back on Friday, as well as the incidental use to/from the hotel each morning/evening. Furthermore, by virtue of them being on a long term rental, this also meant they took the vehicles home on weekends (albeit, they generally were not used).
Long story short, they ultimately all ended up with HMRC tax bills for the associated BIK on those hire cars, despite the fact that the employer had forced this upon them. Baring in mind some were given 2.0 petrol auto Galaxy's and the like, some of their bills were eye watering.
Obviously they kicked off big time and refused to work from the Client site any longer, and this was only eventually resolved by forcing all staff to return the hire vehicles to the Surrey office every evening, which obviously ended up in a huge costs and delays to the project due to additional movements round the M25 every single day.
I'm pretty sure use of a hire or pool vehicle, taken from your "normal place of work" gets around this....? Not entirely sure what happens if your contracted to WFH but need a vehicle solely for client visits etc?
You pay BIK on a hire car if it's effectively a company car (i.e. always there and available for private use).
If it's a hire car provided for specific business journeys only (you have to sign a declaration for this - something I have to do most years) there is no BIK as the hire car is no "benefit" to you. In theory there is no maximum duration for the hire, but in reality anything longer than 10 days is looked at as effectively a company car unless you are working permanently away from home (and staying every night in a hotel etc.) over that period.
If you don't need the hire car for personal use (including travelling to work if that's always in the same place) you could avoid the BIK by asking for the hire car on weekdays only. I suspect Enterprise would not bother to pick it up on a Friday evening and deliver a new one early every Monday but you wouldn't be allowed to use it at all during the weekend.
You could avoid some the BIK by asking for a small car derived van instead of a car, but it wouldn't be very nice to drive.
Realistically though, as long as the hire car is something fairly modest (Astra, Focus etc.) the BIK for a few months will only be a few hundred pounds more than you'd be paying on a BIK friendly car like a plug in hybrid, as although their tax rate is lower their value is significantly higher than the base model cars hire companies normally provide. For that you get a car which the only cost to run is the petrol you put in it. Make the most of it, take all that garden waste, rubble etc. you don't want in the boot of your own car to the tip. You can also keep the miles off your own car - perhaps do the NC500 in it, actually second thoughts doing that in an 1.4 Astra would be a bit of a waste.....
If it's a hire car provided for specific business journeys only (you have to sign a declaration for this - something I have to do most years) there is no BIK as the hire car is no "benefit" to you. In theory there is no maximum duration for the hire, but in reality anything longer than 10 days is looked at as effectively a company car unless you are working permanently away from home (and staying every night in a hotel etc.) over that period.
If you don't need the hire car for personal use (including travelling to work if that's always in the same place) you could avoid the BIK by asking for the hire car on weekdays only. I suspect Enterprise would not bother to pick it up on a Friday evening and deliver a new one early every Monday but you wouldn't be allowed to use it at all during the weekend.
You could avoid some the BIK by asking for a small car derived van instead of a car, but it wouldn't be very nice to drive.
Realistically though, as long as the hire car is something fairly modest (Astra, Focus etc.) the BIK for a few months will only be a few hundred pounds more than you'd be paying on a BIK friendly car like a plug in hybrid, as although their tax rate is lower their value is significantly higher than the base model cars hire companies normally provide. For that you get a car which the only cost to run is the petrol you put in it. Make the most of it, take all that garden waste, rubble etc. you don't want in the boot of your own car to the tip. You can also keep the miles off your own car - perhaps do the NC500 in it, actually second thoughts doing that in an 1.4 Astra would be a bit of a waste.....
SkodaIan said:
base model cars hire companies normally provide.
When did you last rent a car? The national firms have loads of actually rather high specification cars on their fleets these days, due to the strong residual value and ever growing desire for "like for like" courtesy cars for insurance work.I couldn't tell you the last time I had a proper billy basic "fleet spec" hire car.
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