Company Van + 24 mo rule

[co_sjo]

Hi all

Apologies for a potential duplicate topic, search doesn't like three letter words.


I am caught out by the 24 mo rule due to my bread and butter contract. I currently commute to one or two of their locations using my personal vehice and do not claim mileage back against my company (anymore).

I would like to buy a van through my company for some additional work I will be doing. I understand that this work, due to its nature, will not be caught out by the 24 mo rule therefore it is fully expendable through the company.

I would like to understand if there is any way I can use this van to commute to my main client above without getting hit with BIK. I'd be happy to pay for my own fuel, for example, if that made me exempt from BIK.

I know i'm probably clutching at straws here. Thanks!

[Clare@InTouch]

There are two elements to a van BIK - the use of the van and then any fuel. Paying for fuel would therefore only exempt you from part of it, and a small part at that.

The only way to avoid the entire BIK would be to use the van wholly for business, with any private use being entirely incidental (like stopping at the shop on the way to work - not using the van to go to Tesco on Sunday). That's really difficult to prove if you're a one man company though, especially if you take the van home at night and it's therefore available to use privately.

[northernladuk]

There are two elements to a van BIK - the use of the van and then any fuel. Paying for fuel would therefore only exempt you from part of it, and a small part at that.

The only way to avoid the entire BIK would be to use the van wholly for business, with any private use being entirely incidental (like stopping at the shop on the way to work - not using the van to go to Tesco on Sunday). That's really difficult to prove if you're a one man company though, especially if you take the van home at night and it's therefore available to use privately.

And won't be hard for HMRC to spot an IT contractor and a van and come and question why you would need one for your main business.

[Clare@InTouch]

And won't be hard for HMRC to spot an IT contractor and a van and come and question why you would need one for your main business.

If you're paying the BIK it doesn't matter, but if you're trying to claim full business use then it could indeed be tricky.

A van BIK is peanuts really though - you get to claim the VAT back, plus 100% tax deduction in year one, and only £3,000 BIK for the van with an extra £564 for the fuel. That's only £712 a year in extra personal tax, which could be very efficient if you use a lot of fuel.

[Craig at Nixon Williams]

As Clare has already touched on, if the Van is going to be taken home (as I assume it will be) then there will be a Benefit in Kind, there is no way around that – however the BIK is very low.

Since you will have to pay the BIK then you can use the van for whatever you like including commuting to clients where you have exceeded 24 months, shopping etc.

Craig

[Sockpuppet]

As above. I have a company van then again I work in transport and logistics so easy for me to justify. A £30k list van cost me £19k cash out of pocket - however as I only go upto the 40% tax barrier with divis it was an easy way to get more money out the company to benefit me without taking the upfront tax hit.

Plan is to keep for a few years and sell, vans generally have pretty strong residuals. The only I have depreciates around £2k per year for the first 3 years, remembering that 40% of that depreciation is being paid for by VAT+Corp Tax effect.

I did a lot of sums and it about works out for me. You have to do a lot of personal driving to justify it though. I still have a personal car that gets rolled out for trips to London and although there is nothing stopping me charging 45p per mile on it I just pay fuel only rates - best not to take the mick.

[bobspud]

And won't be hard for HMRC to spot an IT contractor and a van and come and question why you would need one for your main business.

IT Infrastructure and Data centre moves. Simples I lost have lost count of the tonnage of kit that has gone into my now long dead Saab estate over the years.

By the way Mercedes now have a mileage tracking application on the Apple store just open the app and flick the bar and your mileage and exact route is calculated So its becoming much easier to own a car and show the real mileage that was done and when...
Don't think even HMRC would be dumb enough to go to war over mileage claims when you have the full sat nav evidence of every journey and a tallying trip meter in the car...

[amcdonald]

I still have a personal car that gets rolled out for trips to London and although there is nothing stopping me charging 45p per mile on it I just pay fuel only rates - best not to take the mick.

Take the 45p a mile, that is meant to cover not just fuel costs but general wear and tear as well

Claim it, it's not taking the mick

[Contreras]

Take the 45p a mile, that is meant to cover not just fuel costs but general wear and tear as well

Claim it, it's not taking the mick

45p/mile doesn't even cover fuel costs when you consider that's 36p that could be taken as a dividend instead. Unless somehow you manage to run a car for under 9p/mile, definitely not taking the mick.

[eek]

45p/mile doesn't even cover fuel costs when you consider that's 36p that could be taken as a dividend instead. Unless somehow you manage to run a car for under 9p/mile, definitely not taking the mick.

but you have to remember we are the exception rather than the rule. If instead of paying dividends we were under IR35 the additional 22.5p/27p would probably be enough to run a car.

You have to remember that rules are based around helping normal PAYE employees not those with other payment means...