Reply to: Claiming A Percentage Of Car Tax / Insurance

[ChimpMaster]

Wow, what a pointless argument and no doubt a wasteful afternoon charged to your clients - all to debate what? A £20 annual saving in tax on RAC membership?

Well done.

[CloudWalker]

[TheFaQQer]

I will ask him when I do this years accounts in April.

What was the answer?

[ASB]

Business Class 1 means that you can use the vehicle in connection with your work, i.e. driving to differing client sites and so on.

Generally, but in my experience differing companies do seem to define it differently. Generally the travel "to from single place" is covered (cf sdp and commuting). A couple of cos I have insured with over the years did want a little more to cover site1 - site 2 etc during the day though.

[kevpuk]

Business Class 1 means that you can use the vehicle in connection with your work, i.e. driving to differing client sites and so on.

Standard SD&P (Social, Domestic & Pleasure) is just that - nothing to do with work at all.....although it used to be the option for most as it included travelling to and from your place of work. It did not cover driving to Head Office, for example, for a meeting....only your single place of work.
Nowadays, insurance companies offer a marginally enhanced (read cash cow) version of SD&P which also includes Commuting - this is still limited to a single place of work, however.

Finally, there is Business Class 3 which permits the use of the vehicle in relation to Sales and additional commercial use. It also covers carrying of light goods...

Here endeth the lesson

[northernladuk]

My car is insured for Businesss Class 1, which includes unlimited business use, yes.

Boo

Completely incorrect. I know what you are getting at but what you have put is utter pap.

[Boo]

Something not mentioned in this thread is the statement I emboldened above. If your estimate is true, have you declared that to your insurance co? If not and dependant upon the miles accrued, it is likely that your premium would rocket compared to the average private car user. Any saving you 'may' be able to make on any 'business' element of insurance, were it even to be allowed by HMRC, is likely to be swallowed up entirely.

My car is insured for Businesss Class 1, which includes unlimited business use, yes.

Boo

[Boo]

From the horses mouth:

EIM31335 - Employees using own vehicles for work: mileage allowance relief (MAR): no additional relief available

Travel-related expenses within the scope of mileage allowance payments
MAR is the only relief or deduction available for this kind of expense (EIM31210). Nothing more (such as capital allowances, actual expenditure, insurance, breakdown cover, repairs or loan interest relief) is available, however great the employee’s actual expenditure.

Good link, but that is not a statement of the law, just HMRC's opinion as to the general case. HMRC are well know for putting forward partial opinions which do not reflect the law, see the business tests for one famous example.

Boo - your claim that any personal benefit is incidental is without merit. The fact that you always have access to roadside assistance with your own personal car means it's anything but insignificant. The service being provided is not directly related to your job, unless driving is your job, which it isn't.

It is not the case that insignificance has anything to do with incidentalness. HMRC's own advide ondetermining whether use is incidental or not specifically states that the proportion of use is not germane, it is the intention which counts.

You've been pointed to several sources that refute your claim. Genuine business need does not preclude there from being a BIK.

There is no BIK if personal use is incidental.

A company could choose to give their employees healthcare cover because it's in their business interest for sick emoloyees to get well as quickly as possible. This is still a benefit.

Because not incidental.

As I said in my first post, I suspect that YourCo could probably genuinely claim corporation tax relief on the expense, just like most other benefits or remuneration provided to employees. But it still should have been reported on your P11D and it would have attracted NICs.

I'm curious, does your accountant have a view?

I will ask him when I do this years accounts in April.

Interesting discussion which I wasn't expecting my throwaway remark to produce

Boo

[TykeMerc]

Something not mentioned in this thread is the statement I emboldened above. If your estimate is true, have you declared that to your insurance co? If not and dependant upon the miles accrued, it is likely that your premium would rocket compared to the average private car user. Any saving you 'may' be able to make on any 'business' element of insurance, were it even to be allowed by HMRC, is likely to be swallowed up entirely.

Not really, Class 1 business use (driving to site and between sites, not carrying goods, parts etc) is extremely cheap, I've had it for years and can't remember the last time I paid more than £10 extra for the year over standard social, domestic and pleasure cover that is an ordinary insurance quote.

[tractor]

..

Hi Gents,

About 80% of the mileage done in my car is for work purposes... The car is owned by me, not the business, and I pay myself mileage of 45p/mile.

Could I also claim back 80% of my annual car tax and insurance costs? Is this legit?

Many thanks!

Something not mentioned in this thread is the statement I emboldened above. If your estimate is true, have you declared that to your insurance co? If not and dependant upon the miles accrued, it is likely that your premium would rocket compared to the average private car user. Any saving you 'may' be able to make on any 'business' element of insurance, were it even to be allowed by HMRC, is likely to be swallowed up entirely.

[TheCyclingProgrammer]

From the horses mouth:

EIM31335 - Employees using own vehicles for work: mileage allowance relief (MAR): no additional relief available

Travel-related expenses within the scope of mileage allowance payments
MAR is the only relief or deduction available for this kind of expense (EIM31210). Nothing more (such as capital allowances, actual expenditure, insurance, breakdown cover, repairs or loan interest relief) is available, however great the employee’s actual expenditure.

Or how about:

These items are not MAPs and so cannot be exempt from tax under the AMAPs legislation:

anything that is not a payment, e.g. benefits provided, say insurance (the full cost should be reported as a benefit to the employee on form P11D)

http://www.hmrc.gov.uk/manuals/eimanual/EIM31215.htm

Boo - your claim that any personal benefit is incidental is without merit. The fact that you always have access to roadside assistance with your own personal car means it's anything but insignificant. The service being provided is not directly related to your job, unless driving is your job, which it isn't.

You've been pointed to several sources that refute your claim. Genuine business need does not preclude there from being a BIK.

A company could choose to give their employees healthcare cover because it's in their business interest for sick emoloyees to get well as quickly as possible. This is still a benefit.

As I said in my first post, I suspect that YourCo could probably genuinely claim corporation tax relief on the expense, just like most other benefits or remuneration provided to employees. But it still should have been reported on your P11D and it would have attracted NICs.

I'm curious, does your accountant have a view?

[TheCyclingProgrammer]

Breakdown cover is it included in the 45p per mile? - The Book-keepers Forum

Even the MP's don't claim breakdown cover!!!

MP claims 3p for 0.06 mile car trip - Green Flag Breakdown Cover

Boo's argument seems to hinge on his claim that the membership is not tied to his personal car or himself, but rather to his Ltd Co, which is interesting but I'm not sure HMRC would see it that way.

Even if it's being paid by his Ltd, surely he must be named as the driver?

The only way I could possibly see it working is if it was some kind of corporate group membership/business fleet cover that applied to any employee of the company but I would imagine it only applied to company owned cars.

[northernladuk]

Breakdown cover is it included in the 45p per mile? - The Book-keepers Forum

Even the MP's don't claim breakdown cover!!!

MP claims 3p for 0.06 mile car trip - Green Flag Breakdown Cover

[vwdan]

As a general rule, that is correct.

However, there are special rules for using your own vehicle for company business and the rule is that you get a mileage allowance to cover ALL the motoring expenses. If you spend less than that then that's your good luck, if you spend more than that then it's tough tulip.

HMRC Factsheet

What if my actual expenses are more than the tax-free amount?

The tax-free amount is the maximum relief you are entitled to in any tax year. You are not entitled to any additional relief if your actual expenses are more than the tax-free amount, whether for interest payments, business insurance, depreciation or any other payments you may have to make on your car. All of these types of expense have been taken into account when working out the rates above.

Yeah, but he's trying to claim the RAC isn't a motoring expense - which makes perfect sense and I'm sure HMRC and the courts will agree. Just think, Boo, you could set a level precedent and allow us all to sling RAC cover through expenses. Personally, I just falsify the invoices along with the strip club costs - far less hassle than faffing around with 'legality'.

[Wanderer]

No, see above. There is no BIK on incidental use of goods or services where the primary purpose is for the company. HMRC are very clear about that.

As a general rule, that is correct.

However, there are special rules for using your own vehicle for company business and the rule is that you get a mileage allowance to cover ALL the motoring expenses. If you spend less than that then that's your good luck, if you spend more than that then it's tough tulip.

HMRC Factsheet

What if my actual expenses are more than the tax-free amount?

The tax-free amount is the maximum relief you are entitled to in any tax year. You are not entitled to any additional relief if your actual expenses are more than the tax-free amount, whether for interest payments, business insurance, depreciation or any other payments you may have to make on your car. All of these types of expense have been taken into account when working out the rates above.