race car / benefit in kind

[isleofthorns]

Am I right to assume that if my company were to buy a race car on my behalf that I would be charged a taxable benefit of 20%pa on the purchase price, ie, on a 50k car that would be 50k x 20% x 40%.

Is this right?

Also, if the car is vat registered and vat is charged on the purchase price then:
1) can you reclaim vat?
2) is the 20% charged based on the net or gross figure?

One other complication..... if the car was pulled off the production line to convert to a competition car by the manufacturer but has both a road vin/v5 as well as a race chassis plate, does that mean they would class it as a road car for tax purposes. The car is in race trim and sorn'd and was converted by the manufacturer and has a competition and race chassis number as well, but feasibly could be mot'd for the road as well.

Any advice welcome

[Eric Mc]

You will be taxed under the BIK system at your top rate of Income Tax.

The company may also have to pay Employer's NIC on the annual value of the BIK.

[isleofthorns]

Which bik system... The road car version or the 20% asset at disposal of a director?

Whilst based on a road model, it isn't a road car anymore and was sold as a race car to the first owner and was run through a company, hence vat registered

[Trailhead]

Don't forget that one way for the Class 1A to be avoided is to make a contribution equivalent to any net taxable benefit (maybe by dividend), so factor that into your calculations.

[Eric Mc]

isleofthorns said:

Which bik system... The road car version or the 20% asset at disposal of a director?

Whilst based on a road model, it isn't a road car anymore and was sold as a race car to the first owner and was run through a company, hence vat registered

If it is not a road legal car capable of being driven on the public highway, it is not a "motor car" so the Benefit in Kind rules will be based on the "Annual Value" rules.

[isleofthorns]

Eric Mc said:

isleofthorns said:

Which bik system... The road car version or the 20% asset at disposal of a director?

Whilst based on a road model, it isn't a road car anymore and was sold as a race car to the first owner and was run through a company, hence vat registered

If it is not a road legal car capable of being driven on the public highway, it is not a "motor car" so the Benefit in Kind rules will be based on the "Annual Value" rules.

That's just the problem - it has both road / race identities,... Ie, it could be mot'd and conceivably used on the road (it has a v5 and chassis number). It also has a Motorsport chassis identity, as this is what it was built to be.

The dealer could invoice me with just reference to the Motorsport identity.... Whilst it is sorn'd on the v5?!

If they were to consider it a road car for bik purposes, how does that work with my existing company car? Do they aggregate benefits or take an average of the total liability across two cars? (ie, you can't drive both at the sane time!)

[Trailhead]

isleofthorns said:

Eric Mc said:

isleofthorns said:

Which bik system... The road car version or the 20% asset at disposal of a director?

Whilst based on a road model, it isn't a road car anymore and was sold as a race car to the first owner and was run through a company, hence vat registered

If it is not a road legal car capable of being driven on the public highway, it is not a "motor car" so the Benefit in Kind rules will be based on the "Annual Value" rules.

That's just the problem - it has both road / race identities,... Ie, it could be mot'd and conceivably used on the road (it has a v5 and chassis number). It also has a Motorsport chassis identity, as this is what it was built to be.

The dealer could invoice me with just reference to the Motorsport identity.... Whilst it is sorn'd on the v5?!

If they were to consider it a road car for bik purposes, how does that work with my existing company car? Do they aggregate benefits or take an average of the total liability across two cars? (ie, you can't drive both at the sane time!)

Just put it on the P11d as a racecar. As long as you don't use it on the road this is the correct treatment.

If you have 2 company cars then you pay BIK on both. There is no averaging out I'm afraid!