Reply to: Buying a car for your family through the company

[Pondlife]

Can't see a BMW in the (under 100g) list, but there are three Lexi...

The 320 efficient is 109g according to the article.

[THEPUMA]

Re-reading the article:

"If it is bought via the company, then in the normal course of events you will be taxed on what is called the benefit-in-kind that you are receiving."

So, it's not your daughter's car, it's yours.

I've got a better solution though:

If your daughter is an employee of your company, (make sure there is evidence that she does some form of legitimate work on a regular basis - perhaps she does your bookkeeping, writes copy for your website, does marketing, telesales etc).

Then you can pay her £136 a week tax and NI free and she can have a company car with no BIK as she earns less than £8,500 a year.

(mod snip - no advertiding Mark)

Two points re the above. The first is that in this case I think it is likely that if they spotted it, HMRC would apply the anti-avoidance legislation referred to in my previous post.

Secondly, the £8,500 includes the value of the benefit-in-kind. In this case, therefore, with a salary of £7,072 plus a BIK of £1,500, you would exceed £8,500 and the whole benefit would become taxable. Obviously, subject to my first point, you would simply reduce your salary by £2 per week in order to avoid this issue.

PUMA

[IR35 Avoider]

Can't see a BMW in the (under 100g) list, but there are three Lexi...

[northernladuk]

There was a thread in on the board sometime earlier this year about how some models of BMW (320d iirc) were quite tax efferent if bought through MyCo, but can't seem to find the thread, but this link on the net may be the gist of it.

It depends on the CO2 and I have posted a link with all the cars you can get at the lower CO2 bands a few above.

[portseven]

There was a thread in on the board sometime earlier this year about how some models of BMW (320d iirc) were quite tax efferent if bought through MyCo, but can't seem to find the thread, but this link on the net may be the gist of it.

[Kent accountant]

It's your company car, not your daughter's - there is a better solution though

Re-reading the article:

"If it is bought via the company, then in the normal course of events you will be taxed on what is called the benefit-in-kind that you are receiving."

So, it's not your daughter's car, it's yours.

I've got a better solution though:

If your daughter is an employee of your company, (make sure there is evidence that she does some form of legitimate work on a regular basis - perhaps she does your bookkeeping, writes copy for your website, does marketing, telesales etc).

Then you can pay her £136 a week tax and NI free and she can have a company car with no BIK as she earns less than £8,500 a year.

(mod snip - no advertiding Mark)

[northernladuk]

Very intereting and detailed as always THEPUMA, thank you.

Out of interest here is a web page showing cars available by CO2 banding

Carbon Dioxide CO2 Car Emissions | UK New Car Data

Surprising to see there are actually Golfs and Audi A3's in the list so it isn't all just pokey little plastic cars.

[THEPUMA]

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!

PUMA

[adubya]

Your are joking aren't you. Have you not read any of this? It is all above board

So was installing duck houses and cleaning one's moat.

Is it better to do it this way or buy your own...

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.

[northernladuk]

Hasn't this kind of deal got "pisstake" written all over it ?

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...

Don't really see what the advantage is then

It seems so..

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 anyway

[adubya]

Hasn't this kind of deal got "pisstake" written all over it ?

[SimonMac]

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.

Don't really see what the advantage is then

[Fred Bloggs]

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 CT

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.

[SimonMac]

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 CT

[Fred Bloggs]

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.