Lease cars and tax

[psychocandy]

I assume the NHS still do final salary pensions, otherwise the "saving on superann" is a bit of a misnomer

They do - so reducing your salary like this in the last few years is probably not a good idea!

[SimonMac]

http://www.cardiffandvaleuhb.wales.n...20brochure.pdf

I assume the NHS still do final salary pensions, otherwise the "saving on superann" is a bit of a misnomer

[northernladuk]

http://www.cardiffandvaleuhb.wales.n...20brochure.pdf

Nice find...

It would also be wise to go compare with personal lease schemes. Not all employee benefits are actually better than you can get out in the market. I remember years ago our company car scheme was though Lex Leasing and it worked out cheaper to go get one yourself from a number of companies rather than take the company option.

[pr1]

http://www.cardiffandvaleuhb.wales.n...20brochure.pdf

[northernladuk]

Surely HR can document all this to you with estimates or examples of the model rather than doing all this guessing? It is their job after all.

[psychocandy]

Go on then psychocandy I'll bite, seen as NLUK hasn't said it, have you asked your accountant.....

When I've seen the NHS company car benefits before they've all been pretty generous and quite efficient so if things haven't changed (they probably have) then they are worth considering.

You are provided with a company car but are required to make a monthly payment towards private usage, the payment must be towards private usage (not additional insurance etc.) or else you don't get a deduction against the benefit in kind. In a lot of cases you can actually get this BIK reduced to a very low figure (sometimes NIL).

The tax free amount the employer can reimburse is then based on the advisory fuel rates that HMRC publish/update each quarter so if your wife still received the 45ppm/25ppm there will be a taxable benefit each year reported on her P11d (sometimes adjusted via payroll each month).

Depending on her actual earnings there may/may not be tax to pay on the BIK (I think you've mentioned she works part time?) and remember that the BIK will reduce the amount of dividends she can receive tax free if you split dividends with her (I think you do?)

Hope this helps.

Martin
Contratax Ltd

But yes she works part-time with a salary of about £12K so not a huge amount. Taking the cost of the lease car out of this will reduce this by about 3K per year. Then of course, adding in the fuel BIK possibly. Still not a great deal of tax payable.

Also suits me since I pay £10K salary so we get split dividends equally and both near enough max out up to the £40K bracket (since we've got similar salaries now) and can stop there if we want.

[psychocandy]

Go on then psychocandy I'll bite, seen as NLUK hasn't said it, have you asked your accountant.....

When I've seen the NHS company car benefits before they've all been pretty generous and quite efficient so if things haven't changed (they probably have) then they are worth considering.

You are provided with a company car but are required to make a monthly payment towards private usage, the payment must be towards private usage (not additional insurance etc.) or else you don't get a deduction against the benefit in kind. In a lot of cases you can actually get this BIK reduced to a very low figure (sometimes NIL).

The tax free amount the employer can reimburse is then based on the advisory fuel rates that HMRC publish/update each quarter so if your wife still received the 45ppm/25ppm there will be a taxable benefit each year reported on her P11d (sometimes adjusted via payroll each month).

Depending on her actual earnings there may/may not be tax to pay on the BIK (I think you've mentioned she works part time?) and remember that the BIK will reduce the amount of dividends she can receive tax free if you split dividends with her (I think you do?)

Hope this helps.

Martin
Contratax Ltd

Cheers Martin,

Roughly dependent on car its around £250-£300 via salary sacrifice. Then in a lot of case, the BIK is as little as £15-£20 month. I guess this is because even though its a company car, the payment made each month counteracts the company car benefit to some extent?

But like you said, its still a company car (Albeit one the employee pays a bit for) so I understand how the difference between 45p and 9p a mile (cc rate) is now taxable. Still pretty good. 45p a mile. Taxed on 36p of it - so 7.2p is now a BIK and taxable. Still leaves almost 38p a mile.

And of course, no wear and tear, other costs to worry about because its not your car. I must admit I am surprised they pay this because you're going to 'make' 30p a mile roughly for business usage (because your only costs are fuel). If I've got this right that is.

[northernladuk]

Nothing to do with my ltd. NHS lease.

Just thought I'd ask on here because its similar.

Are you sure? I thought they could be quite different being an employee perk and may not follow the same rules?

Has she asked her HR ?

[psychocandy]

You've tried a search haven't you? Quite a lot of discussion on leases, particularly with the changes coming.

Will this be her main car or yours?

Nothing to do with my ltd. NHS lease.

Just thought I'd ask on here because its similar.

[ContrataxLtd]

Mrs PC works for the NHS and is keen to get a lease car. Must admit it confuses.

I understand you pay for the lease (albeit cheaper) but its still a company car so there is "some" BIK. Not much it appears. Im guessing this is the difference between true company car benefir minus what you pay yourself....

Also, mileage. Pretty sure you still get the standard rate but, apparently, the difference between this and the company car HMRC rate is taxable? (I suppose so if its classed as a company car).

Anyone got a lease car themselves through the company and can explain this?

Go on then psychocandy I'll bite, seen as NLUK hasn't said it, have you asked your accountant.....

When I've seen the NHS company car benefits before they've all been pretty generous and quite efficient so if things haven't changed (they probably have) then they are worth considering.

You are provided with a company car but are required to make a monthly payment towards private usage, the payment must be towards private usage (not additional insurance etc.) or else you don't get a deduction against the benefit in kind. In a lot of cases you can actually get this BIK reduced to a very low figure (sometimes NIL).

The tax free amount the employer can reimburse is then based on the advisory fuel rates that HMRC publish/update each quarter so if your wife still received the 45ppm/25ppm there will be a taxable benefit each year reported on her P11d (sometimes adjusted via payroll each month).

Depending on her actual earnings there may/may not be tax to pay on the BIK (I think you've mentioned she works part time?) and remember that the BIK will reduce the amount of dividends she can receive tax free if you split dividends with her (I think you do?)

Hope this helps.

Martin
Contratax Ltd

[northernladuk]

You've tried a search haven't you? Quite a lot of discussion on leases, particularly with the changes coming.

Will this be her main car or yours?

[pr1]

Mrs PC works for the NHS and is keen to get a lease car. Must admit it confuses.

I understand you pay for the lease (albeit cheaper) but its still a company car so there is "some" BIK. Not much it appears. Im guessing this is the difference between true company car benefir minus what you pay yourself....

Also, mileage. Pretty sure you still get the standard rate but, apparently, the difference between this and the company car HMRC rate is taxable? (I suppose so if its classed as a company car).

Anyone got a lease car themselves through the company and can explain this?

she wants to get it through the NHS or through yourco?

[psychocandy]

Mrs PC works for the NHS and is keen to get a lease car. Must admit it confuses.

I understand you pay for the lease (albeit cheaper) but its still a company car so there is "some" BIK. Not much it appears. Im guessing this is the difference between true company car benefir minus what you pay yourself....

Also, mileage. Pretty sure you still get the standard rate but, apparently, the difference between this and the company car HMRC rate is taxable? (I suppose so if its classed as a company car).

Anyone got a lease car themselves through the company and can explain this?