Another company car (tax) question
Discussion
Guys - I'm hoping somebody could help clarify the tax implications of swapping my cash allowance for a company car.
I currently receive a £6k allowance which is taxed at the higher rate, and beyond that I claim the standard 40/25p a mile. As a travelling consultant my home is deemed to be my place of work, and all travel is to temporary customer sites, therefore I claim mileage from the moment I leave my driveway. I do not 'commute' to a regular place as defined by HMRC.
I have heard through the grapevine that my employer is considering swapping the allowance for a company car.
Does this mean that if the company provided me with a company car (and fuel), on the strict condition it was for business use only, that it would NOT be considered a benefit in kind, and would not therefore incur company car tax? If so, what would constitute proof to HMRC that the car was not used personally, I presume all mileage would have to be logged and a strict written agreement signed between myself and the empoyer?
Any anwers are much appreciated.
Cheers, Neil
I currently receive a £6k allowance which is taxed at the higher rate, and beyond that I claim the standard 40/25p a mile. As a travelling consultant my home is deemed to be my place of work, and all travel is to temporary customer sites, therefore I claim mileage from the moment I leave my driveway. I do not 'commute' to a regular place as defined by HMRC.
I have heard through the grapevine that my employer is considering swapping the allowance for a company car.
Does this mean that if the company provided me with a company car (and fuel), on the strict condition it was for business use only, that it would NOT be considered a benefit in kind, and would not therefore incur company car tax? If so, what would constitute proof to HMRC that the car was not used personally, I presume all mileage would have to be logged and a strict written agreement signed between myself and the empoyer?
Any anwers are much appreciated.
Cheers, Neil
The HMRC guidance states that "There is a tax charge where, because of their employment, a car is made available to and is available for private use by a director or an employee earning £8,500 a year or more, or to a member of their family or household.
You may have difficulty getting HMRC to accept that a company car was not available for private use. You would need, as a minimum, a written agreement between yourself and your employer, a detailed mileage log (far more detailed than for actually claiming mileage), and probably an insurance policy that stated that the car was only insured for business use.
Even then, if HMRC could prove that you did even 1 private mile, then they could try to apply a car and fuel benefit charge. Hope this is useful; if you want to ask anything else, post it up.
You may have difficulty getting HMRC to accept that a company car was not available for private use. You would need, as a minimum, a written agreement between yourself and your employer, a detailed mileage log (far more detailed than for actually claiming mileage), and probably an insurance policy that stated that the car was only insured for business use.
Even then, if HMRC could prove that you did even 1 private mile, then they could try to apply a car and fuel benefit charge. Hope this is useful; if you want to ask anything else, post it up.
Edited by Premature on Monday 8th October 15:37
theboss said:
Guys - I'm hoping somebody could help clarify the tax implications of swapping my cash allowance for a company car.
I currently receive a £6k allowance which is taxed at the higher rate, and beyond that I claim the standard 40/25p a mile. As a travelling consultant my home is deemed to be my place of work, and all travel is to temporary customer sites, therefore I claim mileage from the moment I leave my driveway. I do not 'commute' to a regular place as defined by HMRC.
I have heard through the grapevine that my employer is considering swapping the allowance for a company car.
Does this mean that if the company provided me with a company car (and fuel), on the strict condition it was for business use only, that it would NOT be considered a benefit in kind, and would not therefore incur company car tax? If so, what would constitute proof to HMRC that the car was not used personally, I presume all mileage would have to be logged and a strict written agreement signed between myself and the empoyer?
Any anwers are much appreciated.
Cheers, Neil
I think that if the car is kept at your private address they will consider it available and a BiK. End of. Even pool cars uninsured for private use get the HMRC treatment if you have them at home.I currently receive a £6k allowance which is taxed at the higher rate, and beyond that I claim the standard 40/25p a mile. As a travelling consultant my home is deemed to be my place of work, and all travel is to temporary customer sites, therefore I claim mileage from the moment I leave my driveway. I do not 'commute' to a regular place as defined by HMRC.
I have heard through the grapevine that my employer is considering swapping the allowance for a company car.
Does this mean that if the company provided me with a company car (and fuel), on the strict condition it was for business use only, that it would NOT be considered a benefit in kind, and would not therefore incur company car tax? If so, what would constitute proof to HMRC that the car was not used personally, I presume all mileage would have to be logged and a strict written agreement signed between myself and the empoyer?
Any anwers are much appreciated.
Cheers, Neil
Simply put - yes.
The difficult part is trying to convince a tax official that a given vehicle is "not available" for personal use by a director/employee. To satisfy this criteria, the car must NEVER EVER be used or be capable of being used for non business related journeys. It must live at the business premises when not in use. This last point is hard to justify if the business premises and a director's home are one and the same.
The difficult part is trying to convince a tax official that a given vehicle is "not available" for personal use by a director/employee. To satisfy this criteria, the car must NEVER EVER be used or be capable of being used for non business related journeys. It must live at the business premises when not in use. This last point is hard to justify if the business premises and a director's home are one and the same.
Eric Mc said:
Simply put - yes.
The difficult part is trying to convince a tax official that a given vehicle is "not available" for personal use by a director/employee. To satisfy this criteria, the car must NEVER EVER be used or be capable of being used for non business related journeys. It must live at the business premises when not in use. This last point is hard to justify if the business premises and a director's home are one and the same.
Well...if it's an 'ordinary' employee (not a director) then the car can live at the employee's home. This assumes that the employee is home based of course. I know someone who does this.The difficult part is trying to convince a tax official that a given vehicle is "not available" for personal use by a director/employee. To satisfy this criteria, the car must NEVER EVER be used or be capable of being used for non business related journeys. It must live at the business premises when not in use. This last point is hard to justify if the business premises and a director's home are one and the same.
The main problem might well be getting the employer to change the employment contract (which may say a car is provided and available for private use) and make other documentation changes. People tried to get it done in my last 'big company' job, and the Finance Director wouldn't do it - he didn't want to attract HMRC attention.
If the employee is office based then the journey from home to office is private use so the car would then have to kept as the business premises.
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