Contact us on:
T. 0141 848 7474
F. 0141 848 7419
E. mail@johnmtaylor.co.uk
Company Vehicles & Benefits In Kind
Company Cars
There has been little change for a number of years in the way that
those who have the use of a company car are taxed on that benefit in kind.
The taxable benefit in kind is calculated by multiplying the list price
of the relevant vehicle by a percentage determined by the car's co2 emissions
figure (click here for
the Co2 Emissions Table). From year to year there has occasionally been
a reduction in the base co2 emissions figure at which the percentage begins
to increase.
The taxable benefit starts at 15% of the car's list price for cars
with an emissions figure of less than 129g/km rising to a maximum of 35%
of list price. From 6 April 2011 this lower emissions level reduces to 124g/km. For cars with a co2 emissions figure of less than 120g/km the appropraite percentage of the car's list price will be 10% (this reduces to 100g/km from 6 April 2012). A car's list price is the on the road price including any
optional accessories, VAT, delivery charges and vehicle excise duty but
excludes the first registration fee.
Diesel Cars
Those employees who drive diesel cars are subject to a 3% surcharge
on top of the calculated emissions based percentage.
Fuel for Private Use
Where an employee has a company car that is also used for private
mileage and the fuel for that private mileage is paid for by the
company there is an additional fuel benefit charge. The fuel benefit arising
is based on the same co2 emissions based percentage as used in calculating
the car benefit with the difference that the percentage is applied
against a set figure of £18,800 (£16,900 up to 05/04/10). Unfortunately
unless the employee refunds all fuel used
for private mileage the full benefit charge is applied. The fuel benefit
charge is waived where the employee keeps an accurate and detailed record
of private mileage and can demonstrate that all fuel for private mileage
is refunded to the employer. The appropriate mileage rates (reviewed twice
yearly) at which this should be calculated is as follows:-
Private Mileage Refund Rates - Petrol and LPG cars (as from 01/03/12) |
|||
|
Rates Per Mile |
||
Engine Capacity |
Petrol |
LPG |
|
Up to 1400cc (Up to 1600cc - Diesel cars) |
15p |
10p |
|
1401 (1601 for Diesel cars) - 2000cc |
18p |
12p |
|
Over 2001cc |
26p |
18p |
|
Private Mileage Refund Rates - Diesel Cars (as from 01/03/12) |
|||
|
Rates Per Mile |
||
Engine Capacity |
Diesel |
||
Up to 1600cc (Up to 1600cc - Diesel cars) |
13p |
||
1601 - 2000cc |
15p |
||
Over 2001cc |
19p |
||
If you would like a copy of our private travel mileage log please email us and we will be happy to send you a copy.
VAT Fuel Scale Charges
Where you have company cars through your business you have the
option of claiming back all the VAT paid on the fuel purchased for the cars.
However, where the company cars are used for private mileage a fuel scale
charge must be put through the VAT Return for each Return period. If the
company can prove that no private mileage is travelled
in the cars no fuel scale charge is necessary. In practice it is very rare
that no private mileage is travelled in a company car so in the vast majority
of cases a fuel scale charge is applicable if the VAT is reclaimed.
As any VAT reclaim on fuel is optional it is up to the company
to determine whether or not it is beneficial to claim back the VAT given
that a fuel scale charge will be applied. In cases where total mileage is
relatively low it is often not beneficial to reclaim the VAT as the resulting
fuel scale charge will result in a greater net cost to the company.
For VAT accounting periods commencing on or after 1 May 2007 the
VAT fuel scale charge will be based on the Co2 emissions figure of the vehicle
in question rather than the vehicle's engine size. The Co2 is usually shown
on the vehicle log book and this figure should be used to calculate the
fuel scale charge. This change is an attempt by HMRC to align the fuel scale
charge with the environmental efficiency of the vehicles engine such that
cars with a higher Co2 figure (and therefore a less clean engine) will suffer
a greater fuel scale charge than it's greener counterparts. Where the vehicle's
log book is unavailable the Co2 emissions figure can be obtained from the
online database compiled by The Society of Motor Manufacturers Limited available
at http://www.smmt.co.uk/co2/co2search.cfm .
To obtain the relevant VAT fuel scale charge as based on the Co2 emissions
figure please visit the following page 'Vat
Fuel Scale Charges'.
Business Use of Own Car
Where employees use their own car for business use it is reasonable for the company to reimburse the cost of this business mileage to the employee without the employee suffering any tax charge on the payments received. The statutory rates at which these payments should be made are known as Approved Mileage Allowance Payments and are as follows:-
Cars & Vans |
|
On the first 10,000 business miles per tax year |
45p per mile * |
On each additional business mile |
25p per mile |
Motorcycles |
24p per mile |
Bicycles |
20p per mile |
* Prior to 6 April 2011 the rate applicable to the first 10,000 business miles per tax year was 40p per mile.
These payments do not require to be reported on Form P11D provided the employer does not reimburse business mileage at a rate higher than that shown above.
Company Vans
Employees with a company van available for unrestricted private
use are taxed on a benefit in kind of £3,000 per annum with a further
£500 per annum charge (£550 from 6 April 2010) if fuel is provided for private
use. In the case that employees have a company van for business purposes only and any private
use is restricted to insignificant use only along the lines of:-
1. Taking an old mattress or other rubbish to the tip once or twice
a year.
2. Regularly making a slight detour on the way to work
to buy a newspaper.
3. Stopping at the dentists on the way home from work.
then the van benefit charge can be removed. However, any use for
private purposes in excess of the above will result in the full
company van benefit being assessed.
For information purposes HM Revenue & Customs have stated that they
would consider the following to be out with the insignificant private use
range:-
1. Using the van outside of work for social activities;
2. Taking the van away on a week’s holiday;
3. Using the van to go to the supermarket every weekend.
Employee Contributions
Where an employee makes a cash contribution towards the cost of their company car or van or indeed any other asset available for their private use the amount of that contribution can be deducted from the value on which the benefit in kind is to be calculated. For example, if an employee makes a contribution towards the purchase of a new company car then the amount contributed will be deducted from the list price on which the benefit in kind is calculated (subject to a maximum deduction of £5,000).
Income Tax arising on the provision of company cars or vans
Where an employee has the use of a company car or van for private
mileage they will suffer a tax charge calculated on the benefit
in kind charge arising on that vehicle. The relevant benefit in
kind is added to their other income in order to arrive at the tax
charge arising and it is normal practice for this tax to be collected
through PAYE via an adjustment to the employee's PAYE Code.
We hope that you have found this guide useful. If you would like some
further advice or assistance please contact
us.