IIRC, HMRC will tax the director because the car "is available to use". There is no way round this. A different scenario but the principle is the same- I tried arguing HMRC about when I had a company car but it spent many weeks parked at the airport. I tried arguing that I shouldn't be taxed for those days but HMRC stated that it was irrelevant where I was in Europe, the car was still "available for use" to me or my family so I would be taxed on it. HMRC were not interested in the fact that my family weren't employees. The fact it "was available" gave rise to the taxation. Frankly, that seems a very poorly researched article by the BBC, IMO.
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Last edited by Fred Bloggs; 18 August 2011, 18:44.Public Service Posting by the BBC - Bloggs Bulls**t Corp.
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Isn't that an over simplification?Originally posted by Danielsjdaccountancy View Post
Surely if the car was provided to the daughter (not an employee or certainly not in reality an employee) then surely HMIT would simply seek to apply the BIK to the provider of the car (this may then still be cost effective especially considering the cost of insurance for younger folk and the emissions of the car). It would surely simply be a car provided to the employees household and assessable to the employee.
One set of words HMRC use is:-
A risk might be whether the CT deductions were still available for the associated expenses.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 (a ‘company car’).
The original article wasn't suggesting that no BIK was payable in the daughter case, simply that it might still be a more cost effective way of acquiring the vehicle.Comment
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As far as I can see, it matters not a jot whether the daughter or the director uses the car. It is available for use so the tax is due. BTW, there is NIC's to pay too on the car.Public Service Posting by the BBC - Bloggs Bulls**t Corp.
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If I have read this right, what happens in year 2, 3 or 4 of owning the car?
If you pay say 10% of the list price each year after two years you will end up paying more in BIK than you save from CTOriginally posted by Stevie Wonder BoyComment
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You pay BIK as long as you have use of the car. On the 10% taxable value there is income tax and NIC's to pay each year.Originally posted by SimonMac View PostPublic Service Posting by the BBC - Bloggs Bulls**t Corp.
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Don't really see what the advantage is thenOriginally posted by Fred Bloggs View PostOriginally posted by Stevie Wonder BoyComment
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Hasn't this kind of deal got "pisstake" written all over it ?Comment
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Your are joking aren't you. Have you not read any of this? It is all above board, question is ...Is it better to do it this way or buy your own...Originally posted by adubya View Post
It seems so..Originally posted by SimonMac View Post
Ok so reading the replies this isn't a fancy way around it or hidden gem as suggested by the article, it is just getting a car through the company for employee or daughter, it matters not as the director pays the BiK and you can attempt to save money through the CT. Nothing clever, just company cars and contractors. Have I got this right?
I thought as this article particularly mentioned a daughter as opposed to an employeed spouse it was slightly different but it seems not. The only advantage in the scenario they are giving is if the company pays her insurance and maintenance if you get an old banger for her and her insurance is stupidly high. Saying that at 3-4k a pop for kids insurance that isn't to be sniffed at?
Ah well, was worth a discussion anywayLast edited by northernladuk; 18 August 2011, 20:59.'CUK forum personality of 2011 - Winner - Yes really!!!!
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So was installing duck houses and cleaning one's moat.Your are joking aren't you. Have you not read any of this? It is all above board
Buy a car through the company as an employee of your company, no probs. I was referring to putting a motor through the books for a relative who isn't an employee / shareholder / whatever.Is it better to do it this way or buy your own...Comment
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There are a few issues to consider here. Firstly, the suggestion that it is never worth having a company car is plain wrong. If you have a car with low CO2 emissions (below 110 means you can get 100% capital allowances in the first year and below 120 means the BIK is very modest) then it is usually preferable to own through the company than personally.
Also, anything which qualifies as a van (eg the double cab pick-ups such as Mitsubishi Warrior and Nissan Navarro) can be very tax-efficient, particularly as you should be able to recover the VAT if you are VAT registered.
Coming on to buying a car for family members, this is slightly more complicated. If you provide a spouse or child with a car, the first question is whether you are providing the car in recognition of your services or theirs. If the latter, you will be taxed on it. If the former, and it is commensurate with their duties then, as someone said earlier, it may be exempt if their total package (including salary and company car benefit) falls below £8,500 and they are not a director.
However, there is some further anti-avoidance which makes it a bit more tricky. See EIM23550 - Car benefit: car made available to more than one member of a family or household employed by the same employer. The upshot is that the benefit is charged on the director unless it can be shown that the making available of an equivalent car is in accordance with the normal commercial practice for an employment of the kind held by the spouse.
So maybe if you all get together and agree to give all your spouses company cars, you might get away with it!
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