Reply to: Company Van/Pickup - My first post, be gentle!!!

[Darren at Fox-Bartfield]

BIK

The key thing is that it is available for private use....irrelevant whether used or not.

There is the option of deeming it as a "pool" vehicle which we've used before for other non-contractor type clients but even then, the vehicle had to be available to all staff, insured for business purposes only, and full mileage records maintained. That way were able to demonstrate to HMRC that all trips were business related. Bit easier to prove when you've a few staff but if you're a sole director with the business premises being your home then a very sticky wicket!

Yes, you'd get the cost of the vehicle, running costs, etc to go through the company accounts but there's the BIK to deal with as well so sitting down with the numbers to weigh up whether worthwhile is advisable. I carried out the same exercise for a client 2 weeks ago, comparing pros and cons of a pickup, car and a mobile home either privately, through company and with finance or cash. The differences are pretty substantial depending on the vehicle, length of time intend to keep it, finance, etc so need the details to work out which way to go.

[Fred Bloggs]

That's more what I was hoping someone would say. As I would also have a separate family car so no van use outside of work, do I need to pay BIK? Accountant says no.

Yes you do. The accountant is wrong. The vehicle is available for use, so you pay BIK. No question about it, that is how it is. I even argued with HMRC that when I was abroad and the car was parked at the airport back in the UK that I shouldn't pay BIK for those days. HMRC declared the car was still AVAILABLE at the airport, so BIK was chargeable. Not being able to use it was my problem, not theirs.

[Lance]

As its available to you in the evenings I think the answer is yes, you will.... It depends on you and your accountants attitude to risk though...

Also note I'm not an accountant, just a contractor who reads up on these things...

My accountant was very clear on this. If it's at home then you have personal use. But..... trying not labour the same point again and again............ It's not business miles once the 24 month rule is hit so all his mileage to and from current gig are personal.

[northernladuk]

That's more what I was hoping someone would say. As I would also have a separate family car so no van use outside of work, do I need to pay BIK? Accountant says no.

If it's parked at or near your property it's available for personal use so yes. Being available is enough apparently. I also believe the insurance will allow private use so it's going to be very difficult to convince anyone you never use it except for work.

Here is a good Q&A but it's about cars.
http://www.accountingweb.co.uk/any-a...-are-not-a-bik

I thought you were replacing you car for this van. Isn't paying for your own car and then getting taxed on a company van getting a little ridiculous?

[eek]

That's more what I was hoping someone would say. As I would also have a separate family car so no van use outside of work, do I need to pay BIK? Accountant says no.

As its available to you in the evenings I think the answer is yes, you will.... It depends on you and your accountants attitude to risk though...

Also note I'm not an accountant, just a contractor who reads up on these things...

[nelly76]

Not quite. Before the 24 month rule kicked in the OP was able to pull £9500 from the company to cover his commute costs - he can no longer do that.

One solution to the 24 month rule is to stop using your own vehicle for the commute and use one owned by your company (and taking the income tax hit for the benefit in kind that comes from doing so) so that the company is covering all costs (vehicle purchase, road tax, insurance, servicing and diesel) directly from untaxed company income. As you accountant says the cheapest vehicle (from a personal tax basis) is to use a Van but as he says it's not tax free...

That's more what I was hoping someone would say. As I would also have a separate family car so no van use outside of work, do I need to pay BIK? Accountant says no.

[northernladuk]

I remember it because it was one of the approaches that was suggested when it looked like expenses were to be tulip canned last August...

Ah OK. I can see it might be worth looking at if it's a permanent solution but to do in the hope you stay at your client for a long period seems odd. It's like planning to put yourself at IR35 risk Hope the OP posts the figures his accountant comes up with.

[eek]

Oh dammit. That's not how the accountants post read to me and didn't see that in any of the 24 month posts but if that is the case I could do with deleting some of my posts to clean the thread up. Unless what you say is possible but highly inefficient.

It's also not going to work in his favour if he buys it and then gets canned anytime soon I wouldn't have thought. Expecting to stay in a gig long enough to warrant buying a company van sounds a bit part and parcel'ish to me to be honest.

I guess the next thing is to get the accountant to run the numbers.

I remember it because it was one of the approaches that was suggested when it looked like expenses were to be tulip canned last August...

[northernladuk]

Not quite. Before the 24 month rule kicked in the OP was able to pull £9500 from the company to cover his commute costs - he can no longer do that.

One solution to the 24 month rule is to stop using your own vehicle for the commute and use one owned by your company (and taking the income tax hit for the benefit in kind that comes from doing so) so that the company is covering all costs (vehicle purchase, road tax, insurance, servicing and diesel) directly from untaxed company income. As you accountant says the cheapest vehicle (from a personal tax basis) is to use a Van but as he says it's not tax free...

Oh dammit. That's not how the accountants post read to me and didn't see that in any of the 24 month posts but if that is the case I could do with deleting some of my posts to clean the thread up. Unless what you say is possible but highly inefficient.

It's also not going to work in his favour if he buys it and then gets canned anytime soon I wouldn't have thought. Expecting to stay in a gig long enough to warrant buying a company van sounds a bit part and parcel'ish to me to be honest.

I guess the next thing is to get the accountant to run the numbers.

[eek]

Yep. You are at crossed purposes. He's advising you on buying a vehicle. You are looking at a way around the 24 month rule. Ring him and explain it. You are not claiming fuel, you are claiming Travel and Subsistence for your commute.

Not quite. Before the 24 month rule kicked in the OP was able to pull £9500 from the company to cover his commute costs - he can no longer do that.

One solution to the 24 month rule is to stop using your own vehicle for the commute and use one owned by your company (and taking the income tax hit for the benefit in kind that comes from doing so) so that the company is covering all costs (vehicle purchase, road tax, insurance, servicing and diesel) directly from untaxed company income. As you accountant says the cheapest vehicle (from a personal tax basis) is to use a Van but as he says it's not tax free...

[Lance]

Here is the emails when I asked further questions.

"Yes, claiming fuel is fine, claiming mileage is no longer possible once the company has a vehicle purchase on the accounts. You will also be able to claim and cost in association with running the vehicle, such as repairs, MOT, insurance etc."

And now he is just plain wrong. Claiming fuel (where you pay personally for the fuel and claim as expenses) is not possible for personal mileage. You NEED a fuel card that the company pays for, or the company buys the fuel directly.

And you can claim mileage for business mileage only, but not for the company vehicle, just for your other vehicle.

I don't think your accountant is being very clear. He lacks context for some of the suggestions, and then mixes the context for others.

[northernladuk]

Yep. You are at crossed purposes. He's advising you on buying a vehicle. You are looking at a way around the 24 month rule. Ring him and explain it. You are not claiming fuel, you are claiming Travel and Subsistence for your commute.

[nelly76]

Here is the emails when I asked further questions.

"Yes, claiming fuel is fine, claiming mileage is no longer possible once the company has a vehicle purchase on the accounts. You will also be able to claim and cost in association with running the vehicle, such as repairs, MOT, insurance etc."

"Is claiming fuel still okay, even though the primary use of the van is for commuting? where the travel is to a location where I would fall foul of the 24 month rule."

"That is correct. All running costs associated with the company vehicle, including the costs for fuel, will not be affected by the 24 month rule."

Interesting, also confirmed the above on the phone. Interested to know if any other accountants have this opinion?

[northernladuk]

I can confirm 100% that purchasing a company vehicle will not be affected by the 24 month rule,

Very poorly worded. They are correct, purchasing a company vehicle has nothing to do with 24 month rule... but that's not what you asked so he's confirmed wrong.

as the vehicle is owned by the company and it accessible by it’s employees (you) in order to travel to the clients sites to carry out the work for the business. All other methods of transport, plus mileage, subsistence and accommodation are no longer claimable if you fall within the 24 month rule.

But it doesn't mention T&S distinctly. It can be used but he doesn't mention claiming. I think it's connected to the comment above which is talking about purchasing the vehicle which has sod all to do with 24 month rule which is correct.

Providing that the van is only used for business ( so with an incidental amount of usage personally) then you will be able to claim back the full amount in VAT charged within the purchase of the vehicle."

Again talking about the purchase but clearly states used for business and small amount of personal. The thing is now you are outside the 24 month rule the commute to work is now personal as it's a permanent place of work.

I think you've either asked completely the wrong question or the accountant has got the wrong end of the stick. Everything he said is about PURCHASING the vehicle. I don't see an answer to T&S and 24 months in that.

Try asking him about what his view on the commute to the office when outside the 24 month rule is and how that affects a company car. Avoid the purchasing point altogether. Sounds like you've fed him an idea which he is answering but not the real situation, which is how to get around the 24 month rule.

Better still... Ring them and have it out over the phone.

[Fred Bloggs]

Sounds like your accountant understands the rules but hasn't listened to what you're doing as my interpretation is that you aren't doing any business miles at all.

Exactly. The OP now has to count his post 24 month trips as normal day to day commuting. Not allowable against tax.