BIK - no personal use
Discussion
Bit of a specialist question but I've trawled the web and had a few different opinions
My company car is costing me £460/month in BIK (no cash alternative currently but incoming).
The lease ends in 2026 and I have asked the lease company to return the car early which they've agreed to, but my business is reluctant to approve for some reason, even though I would pay the early termination fee..
It would be cost effective for me to leave the car parked at the office (some 215 miles away) and use my own private car for work journeys to avoid paying the BIK. I would record the mileage when the car was left at the office which would be reconciled with the mileage when the car goes back to the leasing company in 2026 (or earlier) thus proving no private (or indeed business) mileage - I would also leave the keys at the office.
Differing opinions on the internet as HMRC are keen for obvious reasons to close down any loopholes or tax avoidance...
Many thanks
My company car is costing me £460/month in BIK (no cash alternative currently but incoming).
The lease ends in 2026 and I have asked the lease company to return the car early which they've agreed to, but my business is reluctant to approve for some reason, even though I would pay the early termination fee..
It would be cost effective for me to leave the car parked at the office (some 215 miles away) and use my own private car for work journeys to avoid paying the BIK. I would record the mileage when the car was left at the office which would be reconciled with the mileage when the car goes back to the leasing company in 2026 (or earlier) thus proving no private (or indeed business) mileage - I would also leave the keys at the office.
Differing opinions on the internet as HMRC are keen for obvious reasons to close down any loopholes or tax avoidance...
Many thanks
It's a tricky subject and you have to be really careful. In a small company it could be as easy as a director/owner saying yes this is no longer your car to use, taking the keys away and not putting it on your P11D. However it does depend on your employer. Ideally I would do what you are suggesting plus:
- Ask management to keep the keys
- Remove any reference to you on the company car policy if it is written as such
- Prepare/get a signed letter (you/manager) stating that you have not got the keys and have no access to the car moving forward
- Include the mileage readings on the letter
- Ask management to keep the keys
- Remove any reference to you on the company car policy if it is written as such
- Prepare/get a signed letter (you/manager) stating that you have not got the keys and have no access to the car moving forward
- Include the mileage readings on the letter
MaxFromage said:
It's a tricky subject and you have to be really careful. In a small company it could be as easy as a director/owner saying yes this is no longer your car to use, taking the keys away and not putting it on your P11D. However it does depend on your employer. Ideally I would do what you are suggesting plus:
- Ask management to keep the keys
- Remove any reference to you on the company car policy if it is written as such
- Prepare/get a signed letter (you/manager) stating that you have not got the keys and have no access to the car moving forward
- Include the mileage readings on the letter
Thanks, that's really helpful. I remember we did this during Covid and keys were sent back to the office and the mileage was recorded and documented.- Ask management to keep the keys
- Remove any reference to you on the company car policy if it is written as such
- Prepare/get a signed letter (you/manager) stating that you have not got the keys and have no access to the car moving forward
- Include the mileage readings on the letter
Just need HR to play ball a little (hopefully this will allow me to actually return the car fully and get the car allowance but that's another story...)
Provided that the vehicle is not available for your personal use, so is only available and used for business journeys, no BIK arises.
Clearly this is open to abuse, so you will need to nailed on with the process which typically involves:
- Contract of employment or specific agreement signed that the car is not permitted for personal use and you will only use it for business trips. No commuting permitted either.
- vehicle is insured for business use only - no Social/Domestic & Pleasure
- Detailed mileage records kept that demonstrate only business trips have been undertaken
- Installing a tracker/telematics system is a good idea to support your position.
Bear in mind that if HMRC decide BIK did arise and you haven’t paid, you could be whacked with a large retrospective bill and penalties.
Where is your permanent place of work in your contract? If it’s not home, you have a potential issue in that you shouldn’t use the car for any commuting.
Is there any way you could designate the vehicle as a pool car? May not work being 200 miles from the office, but if there was somewhere nearer you could keep it and allow others to use it occasionally (it can’t be a pool car if one person has exclusive use) that would not attract BIK.
Clearly this is open to abuse, so you will need to nailed on with the process which typically involves:
- Contract of employment or specific agreement signed that the car is not permitted for personal use and you will only use it for business trips. No commuting permitted either.
- vehicle is insured for business use only - no Social/Domestic & Pleasure
- Detailed mileage records kept that demonstrate only business trips have been undertaken
- Installing a tracker/telematics system is a good idea to support your position.
Bear in mind that if HMRC decide BIK did arise and you haven’t paid, you could be whacked with a large retrospective bill and penalties.
Where is your permanent place of work in your contract? If it’s not home, you have a potential issue in that you shouldn’t use the car for any commuting.
Is there any way you could designate the vehicle as a pool car? May not work being 200 miles from the office, but if there was somewhere nearer you could keep it and allow others to use it occasionally (it can’t be a pool car if one person has exclusive use) that would not attract BIK.
quinny100 said:
- vehicle is insured for business use only - no Social/Domestic & Pleasure
Very few insurers are prepared to issue a certificate on this basis. You're asking them to issue a one off document, not including something that they don't charge for anyway, that can only lead to potential issues in the future when a claim arises and they are told "well I don't normally use it for non business use but I got a call whilst I was in the car working telling me my wife had been taken to hospital, so of course I drove straight there as opposed to returning to the office and picking up my car. When I came out of the hospital the vehicle had been stolen ".Thanks all for the comments!
Looks as though HR are going to allow cars to be returned early but in a phased approach, so oldest cars first (which makes sense)
Asking our HR to execute some of the above steps in all honesty would be a step too far I think.
Ideally, I'll return the car early in Spring '25 which would have it at 2 years into a 3 year contract so I should be in a decent place from an early termination aspect
Looks as though HR are going to allow cars to be returned early but in a phased approach, so oldest cars first (which makes sense)
Asking our HR to execute some of the above steps in all honesty would be a step too far I think.
Ideally, I'll return the car early in Spring '25 which would have it at 2 years into a 3 year contract so I should be in a decent place from an early termination aspect
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