Tax liability for use of company vehicle?
Discussion
Good evening!
The company I work for would like to test some functionality related to cars (deliberately vague, and I apologise) and is proposing that they make cars available to staff so we can drive around in them for a period of time and report back on.
We would take the cars home and mostly use them for SDP and commuting. The company will own the cars, insure the cars for us and pay for all running costs apart from fuel.
What’s the potential tax liability as employees for this? Are they company cars and therefore incur BIK, however that works? Or does the fact that they’re being used for testing make a difference?
Thanks in advance for any advice.
The company I work for would like to test some functionality related to cars (deliberately vague, and I apologise) and is proposing that they make cars available to staff so we can drive around in them for a period of time and report back on.
We would take the cars home and mostly use them for SDP and commuting. The company will own the cars, insure the cars for us and pay for all running costs apart from fuel.
What’s the potential tax liability as employees for this? Are they company cars and therefore incur BIK, however that works? Or does the fact that they’re being used for testing make a difference?
Thanks in advance for any advice.
Thanks Eric.
I guess that means that they would be seen to qualify as company cars, even though we’re testing functionality relating to them on behalf of the company?
If so, this is going to be an expensive surprise for people - some Googling tells me that the BIK is calculated as the new list price x BIK rate x tax rate, so, depending on the exact model used, this will be around £200pm (say £25k x 25% BIK x 40% tax bracket).
Presumably it’s the being able to commute in them and use for SDP that qualifies them - if they were only driven during working hours it would be a different kettle of fish?
I guess that means that they would be seen to qualify as company cars, even though we’re testing functionality relating to them on behalf of the company?
If so, this is going to be an expensive surprise for people - some Googling tells me that the BIK is calculated as the new list price x BIK rate x tax rate, so, depending on the exact model used, this will be around £200pm (say £25k x 25% BIK x 40% tax bracket).
Presumably it’s the being able to commute in them and use for SDP that qualifies them - if they were only driven during working hours it would be a different kettle of fish?
Someone at the company will have to agree with HMRC.
We used to have a similar situation and there were a few rules. There were no BIK implications.
You got a free tank of fuel (you took it full and returned it empty).
You were limited to (from memory) 3 days per month.
You had to fill in a form reviewing / rating the car. If you didn't do that you got banned from taking them.
I assume the rules above were put in place to prove it was research purposes and avoid BIK taxes.
Although the cars were normally prototypes so not sure how you would work out the tax rates!
We used to have a similar situation and there were a few rules. There were no BIK implications.
You got a free tank of fuel (you took it full and returned it empty).
You were limited to (from memory) 3 days per month.
You had to fill in a form reviewing / rating the car. If you didn't do that you got banned from taking them.
I assume the rules above were put in place to prove it was research purposes and avoid BIK taxes.
Although the cars were normally prototypes so not sure how you would work out the tax rates!
blank said:
Someone at the company will have to agree with HMRC.
We used to have a similar situation and there were a few rules. There were no BIK implications.
You got a free tank of fuel (you took it full and returned it empty).
You were limited to (from memory) 3 days per month.
You had to fill in a form reviewing / rating the car. If you didn't do that you got banned from taking them.
I assume the rules above were put in place to prove it was research purposes and avoid BIK taxes.
Although the cars were normally prototypes so not sure how you would work out the tax rates!
Very interesting, thank you - I hadn’t realised such an agreement would be possible, but that’s well worth pursuing for what we want to do.We used to have a similar situation and there were a few rules. There were no BIK implications.
You got a free tank of fuel (you took it full and returned it empty).
You were limited to (from memory) 3 days per month.
You had to fill in a form reviewing / rating the car. If you didn't do that you got banned from taking them.
I assume the rules above were put in place to prove it was research purposes and avoid BIK taxes.
Although the cars were normally prototypes so not sure how you would work out the tax rates!
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