Does company car tax (BIK) reduce mortgage affordability?

[Nickbrapp]

I current have a commercial vehicle for work, which means as a mobile engineer with no fixed place of work it’s not liable for any BIK without private use.

I’m looking at moving to a car, which of course means paying BIK, but what I’m struggling to find out is will this reduce mortgage affordability and the amount I can borrow?

This is a fully funded company car, not a salary sacrifice lease etc, and last time I had one it was a reduction to my tax code on my pay slip instead of a deduction like pension or extra holiday etc

[Sarnie]

Nickbrapp said:

I current have a commercial vehicle for work, which means as a mobile engineer with no fixed place of work it’s not liable for any BIK without private use.

I’m looking at moving to a car, which of course means paying BIK, but what I’m struggling to find out is will this reduce mortgage affordability and the amount I can borrow?

This is a fully funded company car, not a salary sacrifice lease etc, and last time I had one it was a reduction to my tax code on my pay slip instead of a deduction like pension or extra holiday etc

If your net income is lower, then yes it will with a lot of lenders but not all of them.

[MaxFromage]

You can still have a car without private use and then there will be no benefit in kind. Harder to meet the criteria, but it is possible.

[LastPoster]

MaxFromage said:

You can still have a car without private use and then there will be no benefit in kind. Harder to meet the criteria, but it is possible.

Have you ever achieved it? Just about every argument I have ever seen has failed

[Nickbrapp]

LastPoster said:

MaxFromage said:

You can still have a car without private use and then there will be no benefit in kind. Harder to meet the criteria, but it is possible.

Have you ever achieved it? Just about every argument I have ever seen has failed

It’s a option for me, mobile engineer, leave the car at the office or have a tracker which proves the car doesn’t move at weekends, but kinda pointless as I would then have to run my own car, and the costs that come with that would be far more than the £1700 il pay a year in tax for the company car with fuel door to door etc.

[Rich Boy Spanner]

OP, you probably know this but if you get a Phev the BIK is only about 8% and a pure BEV is 2%. So will make little to no difference to income and almost certainly cheaper than using your own car.

[MaxFromage]

LastPoster said:

Have you ever achieved it? Just about every argument I have ever seen has failed

I have read of cases where it has been challenged and accepted by HMRC. Broadly:

- have to work on different client sites each day
- have nowhere to store the car at work
- have no insurance other than business use
- have another car for personal use

etc

I suppose these days it is possible to track all journeys, so HMRC might have no choice but to accept.

[LastPoster]

The difficulty is that the employer has to 'prohibit' use. HMRC won't accept anything else. That means a set of rules maybe for just one person that the employer needs to be seen to be enforcing (not just implementing). Tracker assists with this as you say but I have never known anyone get around it

[MaxFromage]

Gilbert v Hemsley (55TC419) is one in the HMRC Employment manual and I've read of a few others over the years. As you say, it really has to fit the HMRC criteria. I remember reading of the cases where HMRC were following staff to see where the cars went.