Advice needed on car insurance for company car

[Madmax86]

Are you saying that you will never travel from your house for work (even for interviews)?
And have you actually asked the insurers for the difference in cost between each type of insurance?

Correct. I work from home primarily and the car will be used for personal use by me and my wife.

I have now sorted the insurance. Was as simple as calling up Admiral and making a change to my current policy. Simply adding the new vehicle and stating the lease company as the registered keeper, then using my business account to pay for the additional premium. It's not even a new policy, just an amendment, so the existing term will still end later this year.

[Lance]

Correct. I work from home primarily and the car will be used for personal use by me and my wife.

I have now sorted the insurance. Was as simple as calling up Admiral and making a change to my current policy. Simply adding the new vehicle and stating the lease company as the registered keeper, then using my business account to pay for the additional premium. It's not even a new policy, just an amendment, so the existing term will still end later this year.

You've just bought personal insurance using company money, not told the insurance it's a company car, and are just using the ultimate ownership (the lease company) to obfuscate the situation.

Good luck if you need to make a claim. I'm sure you'll be fine though as insurance companies are well known for just paying out for grey area claims.


EDIT: Just a thought....
If it gets stolen, and the insurance payout to you personally, and the insured sum is less than the money owed, what happens then? Do you owe the company the difference? Does it become a director loan?

EDIT: another thought....
How do you provide a receipt to the company for the total cost of the insurance? All you have is the additional premium. You happy with that? Part payment personally of the insurance cost.

[Madmax86]

You've just bought personal insurance using company money, not told the insurance it's a company car, and are just using the ultimate ownership (the lease company) to obfuscate the situation.

I have told the company though. I made it clear several times that I am leasing the company through a 3rd party, purchasing the insurance via my company but as company director, I will be using it for personal use. They told me it was fine, not just Admiral but the previous insurance company I got a quote from too.

EDIT: Just a thought....
If it gets stolen, and the insurance payout to you personally, and the insured sum is less than the money owed, what happens then? Do you owe the company the difference? Does it become a director loan?.

I have taken out gap insurance via my company with the lease company insurer.

EDIT: another thought....
How do you provide a receipt to the company for the total cost of the insurance? All you have is the additional premium. You happy with that? Part payment personally of the insurance cost.

Now this is a good point. I did run this via my accountant and he is comfortable with it as the additional premium relates to the company car

[malvolio]

You've just bought personal insurance using company money, not told the insurance it's a company car, and are just using the ultimate ownership (the lease company) to obfuscate the situation.

Good luck if you need to make a claim. I'm sure you'll be fine though as insurance companies are well known for just paying out for grey area claims.


EDIT: Just a thought....
If it gets stolen, and the insurance payout to you personally, and the insured sum is less than the money owed, what happens then? Do you owe the company the difference? Does it become a director loan?

EDIT: another thought....
How do you provide a receipt to the company for the total cost of the insurance? All you have is the additional premium. You happy with that? Part payment personally of the insurance cost.

We've said all that. All very well claiming the director can have a car from the company, but the underlying assumption is that the director needs it to do his job. It's borderline evasion and illegal use of company assets in breach of the Companies Act and the duties of a director but nobody's listening. So let's just leave him to it.

[WTFH]

I have taken out gap insurance via my company with the lease company insurer.

OK, can you tell us which things you have paid for personally and which have been paid for by your Ltd?
Then, next questions, which things are in your personal name and which are in your company name?

And finally, have you got all these things in writing from the relevant companies, is each company aware of what you are doing, and have you read the details of each agreement you have entered into?

[Madmax86]

I'd be amazed if you could buy insurance for a company car that doesn't include business travel.
It is possible to buy personal insurance for a company car but that's pretty dumb.
And business use is peanuts anyway, so even if you could buy the correct insurance without business it's unlikely to save much, if any, money.

I reckon the OP, and his mate, are fundamentally misunderstanding ;
- what business use is for company cars. Taking a company car to service it is business use. Collecting a company car from the dealership is business use.
- who actually owns the car (it's a lease so the owner will be the lease company, and the lease company may also be the registered keeper)
- what the owner requirements are for insurance (the owner of the car may well have some criteria that need to be met)


Just insure it for business use.....

I seemed to have missed this post.

Yes you are right, my accountant mentioned this too. I will call my insurer and add business use to my policy

[northernladuk]

What are you doing about VAT?

[css_jay99]

We've said all that. All very well claiming the director can have a car from the company, but the underlying assumption is that the director needs it to do his job. It's borderline evasion and illegal use of company assets in breach of the Companies Act and the duties of a director but nobody's listening. So let's just leave him to it.

But OP mentioned 2% BIK to be paid so he is not evading tax.

[malvolio]

But OP mentioned 2% BIK to be paid so he is not evading tax.

HMRC may take a different view. The OP has been very clear that the car is nothing to do with the business. It is therefore easy to argue that the BIK is not the reduced rate applicable to company cars for personal use, but is a fully taxable BIK in that he has free use of a company asset that has no business purpose. On that basis, it is damn close to evasion of the balance of the BIK involved.

Yes, it's a subtle point, but one that has been made several times already. Cherry picking the bits you want to hear can be painful at times.

It would be interesting to heart he views of one of our rather more expert accountants, but I suspect they are either finishing up Christmas or setting up for the January madness...

OTOH I'm tired of arguing that just because it looks like you can, it doesn't mean that you really can. Not my company, not my court case. As I already said.

[northernladuk]

HMRC may take a different view. The OP has been very clear that the car is nothing to do with the business. It is therefore easy to argue that the BIK is not the reduced rate applicable to company cars for personal use, but is a fully taxable BIK in that he has free use of a company asset that has no business purpose. On that basis, it is damn close to evasion of the balance of the BIK involved.

I'd agree with this. It's not too dissimilar to claiming a TV for business purposes and then never using it for the business. It's possible to do but not in the spirit of the rules. The TV one is much more black and white but a similar vein. People have tried to do this so the guidance about what you can and can't claim for the TV has been well documented. With the car thing, this situation crops up extremely rarely. Generally every vehicle bought by the company has 'some' company use. To have a situation where one is bought and there is absolutely zero use is very uncommon and is why it's such a grey area. HMRC didn't need to tighten up the rules because no one gets a car for personal use.

I'm pretty sure if you presented this situation they'd be like 'hell no'. The tax breaks are to aid business, not to provide cheap personal cars. IMO that point is pretty clear, it's just the system doesn't have the relevant controls to manage the situation we have here. If HMRC find systemic abuse I'm 100% they'd provide clarity and the OP wouldn't like what they have to say.