Company Car Question

[Havana_UK]

Guys, I'm still a tad confused about the minefield that is company cars.

Just about to commit to a 530e for 4 years, can see from the above comcar link that it should be 16/14/14 between now and 2022

However reading articles like this https://www.fleetnews.co.uk/news/fl...cles-among-the-highest-polluting-company-cars concerns me that BIK may rise as PHEVs aren't actually hitting their targeted output?

Does anyone have any insights beyond the above?

I wouldn't be at all surprised if PHEVs start to get taxed much harder as company cars. PHEV makes a lot of sense for short journeys with lots of stop start involved, but when you're doing a 50 mile drive the motorway it's just a 2 litre petrol engine dragging a load of extra weight in the form of batteries and motors along with it, so it's no surprise that they are quite polluting.

 

[NiCkNaMe]

Agreed, reading some of the reports they look atrocious as company cars if the organisation is actually trying to reduce their footprint, rather than just fudge it.

Tax year to 5th April 2019/202020/21 2021/22
P11D value £49,945 £49,945 £49,945
Percentage charge 16% 14% 14%
Benefit in kind £7,991 £6,992 £6,992
Tax payable at 20% £1,598 £1,398 £1,398
Tax payable at 40% £3,196 £2,797 £2,797

I guess what I am asking - is the above set in stone, or does it get adjusted each budget? If it's just going to go back up to 16% that's fine, but if they decide to categorize the car from 49g/km to 168g/km (thus in the 32-37% BIK range) as that article is suggesting - then it just doesn't stack up and would be a pricey mistake!

 

[Havana_UK]

Who knows, but I expect the government could choose to change the tax rules at any point. It wasn't so long ago that they changed the escalation rate from 1% per band to 2% per band. The only saving grace for most company car drivers at the time was that the 3% diesel surcharge was canned in parallel, so most people got 1% down in the first year followed by 2% rise, and 2% rise again the year after.

IMO having a company car now is just a really expensive way of not owning a car.

 

[NiCkNaMe]

Similar to leases though, and probably an age old debate but I just find it more convenient than purchasing myself.

I've actually just seen that we may be offering Tesla's which makes things much more interesting TBH!

 

[lordrobs]

IMO having a company car now is just a really expensive way of not owning a car.

It depends really. If your employer offers you a cash alternative then probably, yes. If they don't however it doesn't represent terrible value. My current one will cost me about £3750 over the next three years during which time I'll cover 45 to 60k. So somewhere between 6 and 8p per mile to cover all service costs, tax, insurance and depreciation. It's been about a decade since I looked into car running costs that closely but I don't think that is too bad at all. Especially when you see people getting their nickers in a twist about how what a great lease deal they've found with a ridiculous mileage cap.

Of course if I was lucky enough to be in the 40% bracket I'd probably be of a very different opinion

 

[NiCkNaMe]

For the non alternative fuel vehicles, I can't make it stack up. Anything above around 25% BIK, when added on to what I lose in car allowance becomes more expensive.

However with the EV/PHEV/Hybrids at the 14-16% rate it starts to make a lot of sense. Fully insured, maintained, serviced and high mileage allowance starts to put it on par with what I lose in allowance and also removes the admin of having to sort that stuff out myself. Also high mileage leases are typically expensive, I've always had to balance the mileage out and cut it close a few times before hitting the overages. Car allowance is taxed at 40% anyway considering it's just added as salary as well.

 

[Tinders]

I have a battle at work, the company car is just not worth it, but because im classed as a high mileage user (25kpa) we are not allowed to opt out. Granted its easy not to have to worry about costs, but to pay 4k ish for the privilege.

A hybrid wont work for me either, ive got nowhere to charge and there is no way im driving a Prius or Rav 4 hybrid. Id rather opt out and just buy semi decent 3 year old car and save some money.

 

[Rotty]

I have a battle at work, the company car is just not worth it, but because im classed as a high mileage user (25kpa) we are not allowed to opt out. Granted its easy not to have to worry about costs, but to pay 4k ish for the privilege.

A hybrid wont work for me either, ive got nowhere to charge and there is no way im driving a Prius or Rav 4 hybrid. Id rather opt out and just buy semi decent 3 year old car and save some money.

Can you not use it for private and leave it at work? that way you won't have to pay tax on it

 

[Pudney]

Can you not use it for private and leave it at work? that way you won't have to pay tax on it

The BIK rules don't work like that. The key point is whether the car is available for private use, not whether it factually is/isn't. If he wanted to go down that route he'd probably need to get his employer to enter into some form of contract saying that he's not allowed to use it for private use, plus other safeguards.

 

[Rotty]

I know that but all it takes is your employer to say it isn't

I do next to no private mileage so would be fuming if I had to pay tax for a crap car I won't want or use, fortunately we have option of allowance, they haven't put the rate up for about 15 years though

 

[Tinders]

To be fair im happy with the car(XC60 R design with all the trimmings), its just the tax I resent

 

[mollymoo]

Can you not use it for private and leave it at work? that way you won't have to pay tax on it

That would be a pool car and it would need to be available for others to use and left at work overnight with minor private use.

 

[Rotty]

from what he says that may well suit him

 

[Pudney]

I know that but all it takes is your employer to say it isn't

It absolutely does not require just that. Having seen countless times employers being stung by HMRC for this exact reason, and even in cases where the employment contract states (and that is all the record keeping done), I can comfortably say you need far more than just the employer's agreement.

 

[Rotty]

It absolutely does not require just that. Having seen countless times employers being stung by HMRC for this exact reason, and even in cases where the employment contract states (and that is all the record keeping done), I can comfortably say you need far more than just the employer's agreement.

If its genuinely a pool car and you do not have personal use it is as simple as that

 

[Pudney]

If its genuinely a pool car and you do not have personal use it is as simple as that

1) A pool car is statutorily different from a personal car available for an individual. Pool car I deal with below. For a personal car the importance is that the car is not available for private use AND that it is not so used for private purposes. In a tax tribunal case the burden of proof is on the taxpayer. An agreement and convincing witness statement may be enough, but an agreement and mileage records should stop it getting that far. http://www.legislation.gov.uk/ukpga/2003/1/section/118

118 Availability for private use
(1)For the purposes of this Chapter a car or van made available in a tax year to an employee or a member of the employee’s family or household is to be treated as available for the employee’s or member’s private use unless in that year—
(a)the terms on which it is made available prohibit such use, and
(b)it is not so used.
(2)In this Chapter “private use”, in relation to a car or van made available to an employee or a member of the employee’s family or household, means any use other than for the employee’s business travel (see section 171(1)).

2) In the case of a pool cars and the rule surrounding them there are several qualifying factors, but it is still not enough to merely have an agreement in place. In terms of usage it is necessary to be able to evidence of the actual use of the vehicle and not just the legal position. The evidence can be (as examples) through mileage logs, keeping car keys under lock and key and recording when access is made of them, insurance documentation etc. https://www.bailii.org/uk/cases/UKFTT/TC/2014/TC03345.html

The taxpayers have provided no real documentation to show the use of the pool cars by the members of staff, moreover the cars were kept at their home premises. There were no mileage logs available to show the amount and use of the pool cars by the individuals and there were no written procedures or logs of any kind in place to deal with the use of the cars, the recording of the miles and the prohibition on private use. Whilst it is understandable that if there are two employees, this form of documentation may not be available, on advice from their accountants the taxpayers should at the very least have been able to provide some detailed information to the Tribunal to support their point of view. It would make it difficult for the Tribunal to accept the taxpayer’s argument that the policy of sharing the cars and observing non-private use was adhered to, as there was no real evidence to support that position. The burden of proof is on the taxpayer and it is on a balance of probabilities and this burden has not been discharged.

If interested, the definition of a pooled car is:

167 Pooled cars
(1)This section applies to a car in relation to a particular tax year if for that year the car has been included in a car pool for the use of the employees of one or more employers.
...
(3)In relation to a particular tax year, a car is included in a car pool for the use of the employees of one or more employers if in that year—
(a)the car was made available to, and actually used by, more than one of those employees,
(b)the car was made available, in the case of each of those employees, by reason of the employee’s employment,
(c)the car was not ordinarily used by one of those employees to the exclusion of the others,
(d)in the case of each of those employees, any private use of the car made by the employee was merely incidental to the employee’s other use of the car in that year, and
(e)the car was not normally kept overnight on or in the vicinity of any residential premises where any of the employees was residing, except while being kept overnight on premises occupied by the person making the car available to them.