Company Car ?

Tim wrote

I have never personally known anyone who used a company car only for work purposes, except when all the managers' cars were declared to be 'pool cars' for inter-site trips, and we had to borrow them.

Reply to
Gordon
Loading thread data ...

It is a responsibility in any case, even in the absence of the benefit, but yes, it is worth exploring whether the employee should receive an expense allowance to help him discharge that responsibility.

This is not true. "Not charging" is not what gives rise to the benefit, because charging does not cancel the benefit. If the employee pays market mileage rates for private use, this does not stop the benefit being taxable, all it does is reduce the chargeable benefit by the mileage payments. If a car is assessed at £3500 worth of BIK, and the employee actually does 10k private miles in it and pays 35p for each of them, then all the BIK is eroded, and no tax is payable, but such an arrangement would be of much less use to an employee doing only

1000 miles, or 100, or none.

I like the idea, but I think it would need to be actually charged to cut ice. How about if the employer gave the employee a pay rise, as a (taxable) stabling allowance, calculated to leave enough money in his pocket after tax/NI to meet the tax due on the BIK remainder after deduction of mileage payments?

Reply to
Ronald Raygun

But would such a "stabling" charge be seen as a taxble income. Where would the expenses be for the employee? The chargeable use of a driveway for instance may require business rates to be paid as well as change of use.

I thought the definition of a company car being available meant just that. If however taking a car home as part of the next day's journey then isn't that still acceptable without paying any extra tax? I understood chauffers did it as a matter of course.

Reply to
Fred

Of course it would. You would be providing custodial services.

Change of use? I think not. Business rates? I think not. You wouldn't be charging for use of the drive, but for your effort in keeping an eye on the car.

In normal circumstances that would be seen as commuting, which is classed as private use. Exceptionally, when work has no acceptable facilities for (safe) overnight storage of the car, it could be part of an employee's duties to ensure the car is stored somewhere safe, and if that "somewhere" just happens to be conveniently near to the employee's home, it may be permissible to re-classify what is in essence a commuting trip (which would be taxable) into a business trip (which would not). It's all pretty farcical.

Your specific example of "as part of the next day's journey" is different again, but only has limited applicability. OK for field engineers or travelling salesmen, but not for the majority of folk, who have to visit the office.

Reply to
Ronald Raygun

I think that you extroplate far too far.

tim

Reply to
tim (moved to sweden)

"Ronald Raygun" wrote

Just because it is a "taxable benefit"(in law), doesn't make it a (true)"benefit".

"Ronald Raygun" wrote

I'm suggesting that you don't actually make it available (for private purposes), simply because it happens to be there for work purposes. If you have no intention of ever using it for private purposes, and this is shown to be true (because you never do use it for private purposes), then I'm saying that there is no benefit there.

[I agree that if you do ever turn out to use it privately, then that is a benefit and should be taxed.]

I'm also saying that this "non-benefit" shouldn't be made into a "taxable benefit" just by law - there should be an actual benefit there for HMRC to tax it (but I think you may agree with that?).

"Ronald Raygun" wrote

That sounds fair enough. But he should be able to say that he will never use it privately, and hence "withold permission".

"Ronald Raygun" wrote

But you haven't explained why it is OK for the tax system to be different for the two cases...?

Reply to
Tim

"Ronald Raygun" wrote

Yes it is!

"Ronald Raygun" wrote

Of course it cancels it. If the "taxable benefit" is deemed to be 3500, and the employee is actually charged 3500, then there is NO "taxable benefit"!

"Ronald Raygun" wrote

That simply shows that the "taxable benefit" (prescribed by law) and the "true benefit" (market rates) are different.

What actually gives rise to the "taxable benefit", is that the employee is given something deemed to have a value X and not being charged X for it!

Reply to
Tim

But it is a true benefit nonetheless. Your unwillingness to accept this truth doesn't make it a falsehood. The value which the law attaches to this benefit is unfair, of course, but that's a different issue.

I'm suggesting that too, using a definition for "making available" based on whether you have been given permission for such use. There is a potential problem with this definition in contexts where the user is also the person able to give that permission.

That's an error of logic. Lack of (proof of) actual use is no proof of lack of intention ever to use it.

The benefit lies in being able to change your intention at the drop of a hat, without then needing to ask permission on each specific occasion.

Why should it be taxed rather than merely reimbursed?

I do indeed agree that there is a benefit, but I don't agree that the benefit is as valuable as they deem it to be.

I don't understand why you are using the word "but" here, since when I talk about giving himself permission, it rather assumes that if he doesn't give it, then he's withholding it. But I'm taking it a step further and say that he should be able to countermand and reinstate this withholding at will, thereby turning the benefit and hence the taxable value on and off, with the benefit being charged pro rata on the basis of time.

De minimis and pragmatism. Whilst it is true that if he's got a company laptop, he could, by using it privately, save the expense of buying himself a private one, the value of these things is negligible compared with the value of a car. Also, there has been for too long the wide-spread practice of employers attracting potential employees with packages of salary+car where there has not necessarily been any business use of the car at all, and where the value of the car has in the past escaped tax (because in order to be able to afford to run an equivalent car, the employee would have had to have been paid more and hence paid more income tax and NI).

It is unfortunate that by plugging this loophole, those who do make predominantly business use of their company cars are disadvantaged unfairly.

Reply to
Ronald Raygun

But if the TB is £3500 and the employer charges you £2500, say, there is still a benefit. Hence there has been charging and it has not cancelled the benefit, but only part of it.

Indeed. So it isn't "not charging", but "not charging enough" which gives rise to the benefit.

Reply to
Ronald Raygun

If words were simple and only had one straight forward meaning - what would solicitors do?

"He said I did it and demanded an apology! I knew I didn't so instead of saying sorry I gave an apology and proved I was right."

Reply to
rob

"Ronald Raygun" wrote

It seems to me that if you are only charged

2500 for a 3500 benefit, then you are ** "not charged" ** for 1000 of the benefit!

It is the "not charg> >> > ... not charging you is what gives rise to a "benefit" ...

Reply to
Tim

Your statement that "not charging [for private use] is what gives rise to the [availability] benefit" is a half-truth (or less), since it suggests that if a reasonable charging policy were in place, such as application of mileage rates, then the availability benefit would simply not arise at all, but this is patently not the case. All that happens is that such payments are credited against the assessed value of the deemed benefit. This benefit is given rise to not by "not charging", but by making the car available for private use.

Reply to
Ronald Raygun

"Ronald Raygun" wrote

I disagree. The 'taxable benefit' *is* due to "not charging the required amount" for making the car available - where the required amount is set by the tax rules.

Whatever type of "not charging" which occurs -- partial or full -- does not affect this at all. The 'taxable benefit' arises from either type of "not charging" (partial or full), and so I stand by my earlier statement.

"Ronald Raygun" wrote

I suggested no such thing. Why would you believe that?

"Ronald Raygun" wrote

Disagree. If the 'taxable benefit' arose simply "by making the car available for private use", then charging & paying the required amount for this availability would *not* remove the 'taxable benefit'. But it does! Hence the benefit only arises if you don't pay full price...

Reply to
Tim

BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.