Like I said, it is strange (by definition) 'cos it is not income.
Another strange aspect of it is that it's not taxed on the what it has cost the employer to provide it. It's taxed on the notional savings the employee has made by not having to provide a car himself.
I do £22k business miles per year, working from home, 3 other cars in the household. The IR reckon those business miles cost about £7k/yr. I believe it would be fair for me to pay tax on the actual cost of my proportion of the cars use (using IR rates). I'm only home at weekends and the car's full of kit so I use my wife's car, private use of the firms car is minimal but say 1.5k miles/year, IE I pay tax on £7,300 *
1.5/23.5 =£465 But the revenue wanted me to pay tax and NI on £4,400. Note the past tense BTW :-) Not to mention the scale charge for VAT on private fuel which is not mitigated for low private mileages.
Oddly enough when car benefit rules first got tightened up and income tax started being charged on the IR's perception of the value of the benefit rather than what it had cost to provide it, the issue of cheap mortgages to Bank/Building Soc employees was raised, since at that time these did not attract income tax. The revenue said they could not prove it had cost the employer anything to provide the cheap loan so they weren't taxed. In the days of 15% interest rates a senior bank employee was getting a tax free benefit worth a significant proportion of his salary
(This IR policy may/may not be the case nowadays).
Contrast that with their position on company cars.
So how is "a neighbour doing DIY gas work" "controlled under the CORGI scheme"?
That's a pretty amazingly unusual thing to be doing, but not impossible, I'll grant.
What would happen? How old? Lead? Are you on about lead poisoning, i.e. the reason lead is now frowned on for water pipes, or are you hinting at something nastier, like poisons in the gas becoming absorbed in the gas pipe material and subsequently leaching out when it is recycled as a water pipe? Would that have to be lead too or does copper also act like a sponge for those poisons?
I had a stock of stripped out, used 15mm and 22 mm pipe at the back of the garage. Which over the years I had been re-using indiscriminately. Plumbing used to be my hobby. :-)
One day we had a plumber in and he said I never re-use copper pipe, no matter how long it's not been used 'cos there's chemicals in gas that adsorb onto the surface of the pipe and taint drinking water indefinitely.
It's a benefit - non-cash income. Why is that strange?
Why should it be taxed on what it has cost the employer? The IR is trying to tax income so if you had to receive money to get the benefit it would make sense to tax it on that basis.
I can't personally anymore since I've been a freelance for over 10 years and don't have records going back to when I was staff. But a tax deduction was made by my employer in exactly the same way as they did to cover transport provided to take you home after public transport had stopped. Both were regarded by the IR as taxable 'benefits'.
I wasn't being paid in Ming vases. I just had the use of a car that the business was already running. That's not an income, and I can't realise it as cash. If I applied for a mortgage the B.S. would not allow me to include it as part of my income.
1) It is the one certain way of putting a fair value on it. If I did attempt to get paid in Ming vases that's what the revenue would do. The amounts of tax the IR wanted me to pay were so outrageous it would have been cheaper for me by half to hire a car all weekend, every weekend and whenever else I wanted one to do my private journeys.
2) Please see my other recent posts:
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Where I have illustrated with some figures how this is unfair and
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How other benefits in kind receive different, more favourable treatment.
The car is not negotiable, I have to have it, and I can't sell the benefit on to realise cash, but the IR want their tax in cash!
Only if the IR would accept a sensible value for the benefit. If the actual cost to the employer is not an acceptable way of putting a value on the benefit I'd be happy to pay tax on the benefit at the IR's own mileage rates. Can't say fairer than that!
I'm afraid you did. The evidence is right there in black and white.
Somebody else (Dave Plowman) raised the point "Suppose a neighbour decides on some DIY gas work", to which it was you who retorted "That's already controlled under the CORGI scheme". I demurred.
I now take it you agree that it is not.
Fair enough. Did he make clear whether he refrained from doing this because it was a regulation, or just practice derived from bitter (excuse the pun) experience?
Must have been a very educated plumber, to use a word like "adsorb".
The difference between Dave's experience and that of many others may be some Revenue ruling about "effective place of work" or some such idea. Thuz, if you travel on business to a variety of places to see clients, attend conferences, see suppliers and so on, any overnights necessarily- and-exclusively incurred in such trips are fully reclaimable as expenses and attract no tax/benefit-in-kind guff. However, if you regularly work at your employer's (remote) premises or at some client site long-term, and some Revenue twonk decides that's your regular place of work, then it becomes a Benefit In Kind if your employer chooses to put you up in a hotel close by rather than you having to travel or move house.
but each additional mile has an additional cost to the company.
but this use has a 'value' to you. There are rules which make this specific benefit taxable. You have two choices, pay the tax or ask your employer not to provide you with the use of the car.
I just know that you are going to argue that there are other 'benefits' that people get through 'home' use of company equipment which is not taxable. The response to this will be "so what!"
so?
as is the 'value to you' method
but the "cost to the company" and "value to you" are much the same here.
Then obviously you struck a dumb deal with your employer when you accepted a package with "use of company" car. You should have negotiated better. Why should the revenue lose because you negotiated badly.
The figures are averages, there are losers and winners. For the most part the choice of the loser is to decline the company car when offered
Really, do they. Tough, that's how it works
But you don't have to take it home with you everyday. (I agree that this isn't enough on it's own, you will have to have a contractual agreement with your employer not to)
They do accept a sensible value. Most people with company cars are happy with their deal. Just because you happen to think it's a poor deal doesn't make it a poor deal for everybody
I think you under estimate how many personal miles you really do.
I did say "controlled under the CORGI scheme"? but not the rest
You said "No, the GSI&U regulations do not forbid DIY gas work"
But I had never said they did.
The meaning I intended to convey was that the CORGI scheme restricts working with gas to competent people, that is a measure of "control" and that I saw as reasonable considering the possible dangers of working with gas. It's about as far as I would want to go. The new changes go much further in scope in areas where the danger to the public, neighbours etc is nigh on zero.
No, I regard the restriction to competant people as a measure of control.
I am not qualified according to the regs but I have experience of gas and vacuum installations in medical and lab systems. I would regard myself as competant to install my own gas hob for instance and in the past I have done so. A neighbour in a 27 year old house had smelt gas on and off for years and had called the gas board out on numerous occasions. Recently, she had a new kitchen installed and it was discovered that a solder fitting on a gas pipe had never been soldered, just pushed together. This had been done by a professional installer! I don't know if the CORGI scheme goes back that far.
No, just experience.
From what I hear there are nowadays a number of well educated plumbers, but I don't know the precise word he used.
At a bathroom showroom yesterday I was told the bath I wanted was out of stock but that wouldn't really make any difference, and the manufacturer will still "allow me to order one"! because there is not a plumber in the locality with any availability before christmas. My personal plumber friend has had a heart attack. ;-(
If the necessity for the hotel arose out of your particular circumstances it's taxable. But not many employers pay that anyway, in your business maybe, maybe not nowadays.
If it arises out of the job it's not. I've a machine to install in Aberdeen next week. I won't get taxed on the hotel nights.
Then some pretty large companies 'got it wrong' including most, if not all the ITV companies - and maybe also the BBC.
You would get a payment in your salary equal to the supposed benefit and a simultaneous deduction - after they had used the payment for tax calclation purposes. Unfair? Oh yes. But then it's the IR we're talking about who make rules to suit themselves regardless.
Absolutely no problem with that, and the IR have thoughtfully published a rate. Happy to pay tax on that amount.
But how to put a value on it? In my particular circs it's value is little because the car is full of the tools of my trade and has the seats removed, and I have the choice of three other cars I can use.
I only said it's strange to pay income tax on a notional amount that is not income. The IR could perfectly legally write a rule that there's a bad taste income tax charge of £4,400 p/a (same as my erstwhile car benefit) on the wearing of yellow spotted ties, it would still be strange.
I had the car already and "they" changed the rules. To change the car for a lesser taxed car would affect the way I run my business and cost money, new cars depreciate rapidly and buying second hand cars is risky. Why should my business make changes not in it's interest, and/or take extra risks.
It's inequitable, we are entitled to equality of treatment under the tax system. However, I don't take issue with that particular example, I do take issue with the cheap mortgages being untaxed if it's still going on.
Evidence it's not income as defined by allwords.com
"Money received over a period of time as payment for work, etc or as interest or profit from shares or investment."
Reducing my allowances by £4,400 for the trivial use of a 5 year old car worth £5,000 cash fails the fairness test (& the reasonableness test).
Indeed they are, :-)
I don't follow your logic here. I already had the car.
Still not with you. The problem is with the revenue's rules see evidence above Re: hire cars.
I don't see how the revenue would be better (or worse off) if I had a different form of words with my employer, (Used a pool car, say) it's a tax on an entirely notional amount. They write their own rules.
As I said "They" changed the rules, I had the car already. My accountant advised me that the IR would not accept that the business ran a car and I didn't pay company car tax. I even tried that one under the old rules.
See above re: yellow spotted ties and fairness tests.
I work from home.
Accepted. If you do lots of private miles, and minimum company miles, get the car solely as a perk and chose a car with a low CO2 figure, (you can still get a quite fruity sports type car within these parameters) it's a cheap car for you. Change it three times a year, let the huge depreciation reduce the Corporation tax burden, OTOH if you run a sensible car and actually use the car as an essential part of your work you get clobbered. Is that how you believe the tax system should treat a prudent enterprising business? Do you really want to return to the days when the boss's wife got a BMW sports car on the firm just as a perk
Don't think so. I'll be away in London and Aberdeen this week, and I'll be driving between the two, the car is full of tools, drawings, spare parts, and test equipment. It's a people mover with 3 of the seats removed. I'm not going to empty the bloody thing and put the seats back in when I get home at 10pm Friday night and then reverse the proceadure at 7-00 am Monday morning when there are 3 other cars on the drive.
Oh, BTW don't lose too much sleep about my car benefit predicament. I've sorted it, at the cost of a little re-arrangement the IR now get nothing!
Like I've repeatedly said the IR don't apply their 'rules' equally. You only have to look at MPs to realise this - they are allowed all sorts of 'perks' the rest of us aren't.
Different IR rules tend to applied industry by industry. If you're in the fortunate position of getting 'free' accommodation when away from home on business - keep quiet about it, you could be next.
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