HMRC Definition of company car / private vehicle
Discussion
Anyone here know HMRC rules on company cars?
I've ended up in a dispute with my company due to a recent change in their policy on business travel.
I'm an employee who's been TUPEd a few months ago. Myself and fellow TUPees have a car allowance, and currently entitled to claim the maximum 45ppm on business travel.
The HR Director has now decreed that anyone in receipt of a car allowance will be treated as being in the company car scheme, with the consequence that they will now only reimburse business mileage in accordance with HMRC company car rates, i.e. 18ppm.
We've challenged him, since HMRC guidelines do make a distinction between private vehicles and company cars. However, there is no explicit definition on the HMRC site. So, apparently, since we are paid a car allowance, and this is paid for the provision of a vehicle, it is classed as a company car.
He claims to have consulted HMRC and FSB, and says that since there is an absence of a "Company car scheme" announcement letter from the old company we used to work for, he has been told he would be in breach of HMRC guidelines if he approved mileage claims at the private vehicle rates.
Of course, this is all b******t, we know this, but I need to respond with written evidence from a credible source that convincingly contradicts this.
Can anyone help?
I've ended up in a dispute with my company due to a recent change in their policy on business travel.
I'm an employee who's been TUPEd a few months ago. Myself and fellow TUPees have a car allowance, and currently entitled to claim the maximum 45ppm on business travel.
The HR Director has now decreed that anyone in receipt of a car allowance will be treated as being in the company car scheme, with the consequence that they will now only reimburse business mileage in accordance with HMRC company car rates, i.e. 18ppm.
We've challenged him, since HMRC guidelines do make a distinction between private vehicles and company cars. However, there is no explicit definition on the HMRC site. So, apparently, since we are paid a car allowance, and this is paid for the provision of a vehicle, it is classed as a company car.
He claims to have consulted HMRC and FSB, and says that since there is an absence of a "Company car scheme" announcement letter from the old company we used to work for, he has been told he would be in breach of HMRC guidelines if he approved mileage claims at the private vehicle rates.
Of course, this is all b******t, we know this, but I need to respond with written evidence from a credible source that convincingly contradicts this.
Can anyone help?
100% don't have a company car however.
Car allowance & full rate per mile seems to have been a very good deal.
(Did you get this before you TUPE'd across or only since the change)
Reason I ask
In the companies I have worked in (a while back)
You only got paid the full allowance if you provided your own car & DID NOT receive a car allowance.
If you got a car allowance Company policy meant they only paid around 15p mile to effectively re-imburse you for the fuel as in the company's eyes the car allowance should have covered the rest.
IMHO (& Probably the company's) you seemed to be receiving payment for using your own car twice before their adjustment.
Car allowance & full rate per mile seems to have been a very good deal.
(Did you get this before you TUPE'd across or only since the change)
Reason I ask
In the companies I have worked in (a while back)
You only got paid the full allowance if you provided your own car & DID NOT receive a car allowance.
If you got a car allowance Company policy meant they only paid around 15p mile to effectively re-imburse you for the fuel as in the company's eyes the car allowance should have covered the rest.
IMHO (& Probably the company's) you seemed to be receiving payment for using your own car twice before their adjustment.
Thanks for the replies, confirms what I thought. Just wish I could find a published definition of a company car from HMRC.
The full rate of 45ppm will still be paid to employees with a private vehicle.... but not to anyone who receives the car allowance.
Yes, the HR Director has stated privately that in his view we are being paid twice, because in his opinion the car allowance also includes an element that covers wear & tear. So to me, this is the hidden motive for this policy change. I've heard this argument before...
However, the car allowance addresses the annual fixed, predictable costs of provisioning a car - putting the car on the driveway if you like. I know at the start of each year what I will receive as a car allowance, therefore I know how much to allocate for the actual vehicle, the insurance, the MOT, and On-the-road-tax.
The business mileage claim addresses the variable, unpredictable costs of a car, arising out of mileage. Of course there is the fuel. But wear & tear is proportional to miles driven. The more mileage done, the more frequently I need to replace tyres, brakes, the earlier I need to book a service. Depreciation of the vehicle also increases for higher mileage. I calculate that my car averages 20p a mile in petrol, whereas the company car rates set a maximum of 18p a mile. Which means I will be out of pocket.
So I absolutely refute any suggestion that I would be getting paid twice if I claim mileage at a private vehicle rate.
The full rate of 45ppm will still be paid to employees with a private vehicle.... but not to anyone who receives the car allowance.
Yes, the HR Director has stated privately that in his view we are being paid twice, because in his opinion the car allowance also includes an element that covers wear & tear. So to me, this is the hidden motive for this policy change. I've heard this argument before...
However, the car allowance addresses the annual fixed, predictable costs of provisioning a car - putting the car on the driveway if you like. I know at the start of each year what I will receive as a car allowance, therefore I know how much to allocate for the actual vehicle, the insurance, the MOT, and On-the-road-tax.
The business mileage claim addresses the variable, unpredictable costs of a car, arising out of mileage. Of course there is the fuel. But wear & tear is proportional to miles driven. The more mileage done, the more frequently I need to replace tyres, brakes, the earlier I need to book a service. Depreciation of the vehicle also increases for higher mileage. I calculate that my car averages 20p a mile in petrol, whereas the company car rates set a maximum of 18p a mile. Which means I will be out of pocket.
So I absolutely refute any suggestion that I would be getting paid twice if I claim mileage at a private vehicle rate.
http://www.hmrc.gov.uk/manuals/eimanual/EIM23020.h...
Start here. Sets out the criteria for establishing when a company car benefit charge will apply. You will note that a car benefit charge cannot apply where there is a transfer of ownership (or you own the car outright in the first place):
http://www.hmrc.gov.uk/manuals/eimanual/EIM23205.h...
It is also clear that a company car benefit can only arise where there is no charge under other sections of tax legislation. As you have been provided with a car allowance this is just taxed as additional cash income much like salary.
http://www.hmrc.gov.uk/manuals/eimanual/EIM23050.h...
Bottom line is your company know full well they are not providing you with a company car under tax law. However, unless your terms and conditions state specifically what they will pay for business mileage, the can pay what they want. Common practice to limit the claim to just the fuel element where a car allowance is paid.
Start here. Sets out the criteria for establishing when a company car benefit charge will apply. You will note that a car benefit charge cannot apply where there is a transfer of ownership (or you own the car outright in the first place):
http://www.hmrc.gov.uk/manuals/eimanual/EIM23205.h...
It is also clear that a company car benefit can only arise where there is no charge under other sections of tax legislation. As you have been provided with a car allowance this is just taxed as additional cash income much like salary.
http://www.hmrc.gov.uk/manuals/eimanual/EIM23050.h...
Bottom line is your company know full well they are not providing you with a company car under tax law. However, unless your terms and conditions state specifically what they will pay for business mileage, the can pay what they want. Common practice to limit the claim to just the fuel element where a car allowance is paid.
wonka said:
Which means I will be out of pocket.
No need to lose out,just claim the difference between what the company pays you in business mileage with the correct rate which applies to employees driving their own cars for the benefit of the company they work for,so if the company pays 18ppm,you claim 27ppm (first 10K mls) back from the tax man.Your HR director sounds like a stubborn t
t,would not your old contract (pre TUPE) of employment take precedence over those of the new company?Worth a chat with ACAS IMO,personally I think you're being shafted
Whilst it sucks that you could potentially lose out, I am not sure I follow your argument.
You do not have a company car by HMRC's definition (or anyone else's) but you are paid an amount for use in funding a car which you use for business. Both this amount and the amount paid to you per mile is a contractual matter and has nothing to do with HMRC and their rates/guidance.
An employer is not obliged to pay you a particular rate for mileage and the authorised rates are simply the amount you can be paid without being subject to tax - they are not a rate which has to be used.
I agree you are being played and could lose out but I think you are going about arguing your case in the wrong way. Technically the HR bloke is right, you are getting two payments towards a car (compare yourself to someone using a car for business who does not get an allowance).
I would focus on what you are/were contractually entitled to and how you are losing out rather than all this talk of 'is it a company car or not?'. Does your old or current contract stipulate what the car allowance and mileage rates are each supposed to cover?
You do not have a company car by HMRC's definition (or anyone else's) but you are paid an amount for use in funding a car which you use for business. Both this amount and the amount paid to you per mile is a contractual matter and has nothing to do with HMRC and their rates/guidance.
An employer is not obliged to pay you a particular rate for mileage and the authorised rates are simply the amount you can be paid without being subject to tax - they are not a rate which has to be used.
I agree you are being played and could lose out but I think you are going about arguing your case in the wrong way. Technically the HR bloke is right, you are getting two payments towards a car (compare yourself to someone using a car for business who does not get an allowance).
I would focus on what you are/were contractually entitled to and how you are losing out rather than all this talk of 'is it a company car or not?'. Does your old or current contract stipulate what the car allowance and mileage rates are each supposed to cover?
If you have been TUPE'd across then you are generally entitled to your old terms and conditions. There are some exceptions (to do with critical needs of business) - but they need to consult with you on any changes or face possible claims of constructive/unfair dismissal. So, if you got a car allowance and 40/45ppm then this is what you are entitled to. If not, you can go to ACAS/Union etc. Tell the HR person you are entitled to come across on your old T&Cs. If it is not a company car, then you can get up to 45ppm tax free up to 10,000 business miles - NB! This is the tax limit and drops to 25ppm after 10,000 but can remain at 45ppm for NIC purposes.
I love tax me.
I love tax me.
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