Company car tax exemption

[_rubinho_]

I've just started a new job which requires me to get a company car (or take an allowance £500pm gross £300pm after tax). Currently we have two cars; my beloved Alpina B5 and my partner's Seat Leon. As I will not sell the B5 and my partner needs the Leon for carting the baby around in both these are staying.

I've looked at options for a private PCP lease using the car allowance and also business leases for a company car. Neither present very good options, a private PCP means I'm paying a few grand up front for a car I don't really need and company car tax is ridiculous if you want anything that is going to be half decent for the amount of motorway miles I'll be doing.

Doing a bit of digging I found this:

Company car tax doesn’t apply to all company cars, there are exemptions.

You are exempt from company car tax if;
<snip>
- Your car is not used for personal use
<snip>
If your company car is used purely for business reasons, then you do not have to pay company car tax. This usually means that the car is left on the business property overnight and at weekends and is only used to travel to meetings, to meet clients etc. Unfortunately, commuting does count as personal use in the eyes of the HMRC.

A slightly vague statement on the HMRC website seems to confirm this:

You’ll pay tax if you or your family use a company car privately, including for commuting.

Now, I only live 3 miles away from the office so I can use the Alpina or bicycle for commuting. If I leave the company car and the keys at the office and strictly use it for business miles only can I get away without an enormous tax bill?

[Begall]

Is there a rule in taking the cash allowance that prevents you from just continuing to use your existing car(s)? I.e does it have to go towards something new(er)?

[Sheepshanks]

_rubinho_ said:

Now, I only live 3 miles away from the office so I can use the Alpina or bicycle for commuting. If I leave the company car and the keys at the office and strictly use it for business miles only can I get away without an enormous tax bill?

Some people seem to be able to do this, but you pay tax if the car is available for private use, regardless of whether you use it or not.

HMRC say the employer must state that the car isn't available for private use - employers are reluctant to do this as they don't want to police it or get spanked by HMRC if you get caught out.

[_rubinho_]

Begall said:

Is there a rule in taking the cash allowance that prevents you from just continuing to use your existing car(s)? I.e does it have to go towards something new(er)?

Yes, it has to be a 4/5 door less than 5 years old.

[_rubinho_]

Sheepshanks said:

HMRC say the employer must state that the car isn't available for private use - employers are reluctant to do this as they don't want to police it or get spanked by HMRC if you get caught out.

That's interesting, do you have a source for this? I want to get my ducks in a row before I go to the MD with it.

I was also thinking the "pool car" approach. Make it available for general use, have a sign-in/out book and keep it at the office. I'll have it booked out the majority of the time and then have a few other people sign it out and use it once or twice a month.

[jonah35]

You’ll prob find in the end your employer won’t do it for you and you will have to pay tax. After all, what are the chances of you NEVER using it personally even during work hours. Few employees get away with it

Look at hybrid company cars as they can be cheap

[Wooda80]

What you seem to be asking is will your employer allow you to have neither a company car nor car allowance, but instead provide you with use of a company vehicle for business when required.

I can understand why you are doing it, but essentially you are asking them to downgrade your pay package.

How often are you required to use a car for business?
Are there other people, typically on lower grades than you, who don't get a car or car allowance but who sometimes have to make car journeys in the course of their job? What does the company provide for them?
Do any of your colleagues in receipt of car benefit feel the same way? There might be the opportunity to get away with say 4 pool cars instead of 5 company cars, for example.

The answers to these questions will help to build your case to give up your car / car allowance.

[Sheepshanks]

_rubinho_ said:

That's interesting, do you have a source for this?

https://www.gov.uk/expenses-and-benefits-company-c...

[OPC100]

Take the car allowance, buy a 2 year old Suzuki Swift Sport 5 door (or something similarly priced) with a £9000 loan over 3 years and repeat in 3 years time. You'll have an asset bought and paid for and save loads on company car tax.

[Jimi.K.]

I had the same issue when I moved jobs recently. They forced me to have a company car I didn't want, and when I asked if I could only use it for business use to avoid paying the tax the answer was no because they had no reasonable way of preventing me using it for personal trips and didn't want to be liable.

[Wooda80]

_rubinho_ said:

Yes, it has to be a 4/5 door less than 5 years old.

Assuming that Mrs _Rubinho_'s SEAT meets these requirements then why not take the car allowance and use the SEAT for business on the occasions that you need it.

On days where you office based then walk or bike in as you proposed in one of your other alternatives.

Using the Alpina occasionally for the school run will not kill it I'm sure.