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bigduckontax
bigduckontax, Accountant
Category: Tax
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Experience:  FCCA FCMA CGMA ACIS
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Hi Have a company car. The company I work for pay £289.20

Customer Question

Hi
Have a company car. The company I work for pay £289.20 pcm plus VAT (can't claim VAT back because VAT exempt).
I have to contribute £277.04 pcm towards it.
My question is can my £277.04 monthly contribution legally be taken off my salary so I'm not subject to tax on it?
The reason I ask is that the company is already paying the VAT and I will being paying BIK, seems unfair to then be taxed on the bit I'll contribute.
Thanks
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I'm Keith and happy to help you with your question.
From what you say it would appear that the company car is only used for 4& of the time on company business leaving you with a 96% personal usage. Are you sure of your figures?
Benefits in Kind are subject tp Income tax at your marginal Rate. Here is the CAB's Adviceguide which summarises the position;
'Cars and vans
Tax is payable on a company car if it is available for private use by an employee, company director or their family or household. In nearly all cases, private use includes journeys between home and work. The tax charge is lower for cheaper cars, cars with lower C02 emissions and cars that can run on alternative fuels. There is no tax charge if the car is powered only by electricity.
Cars are also not taxable if:
They are provided only for business, and
They are not available for private use, and
They are not actually used privately.
If you use your employer’s van privately, this can also be taxable. However, if all you do is take the van home with you overnight and do not use it for any other significant private purpose, no tax will be due.'
The benefit in kind is subject to income tax and there is simply no way round it.
So sorry to have to rain on your parade.
Customer: replied 2 years ago.

Hi

Thanks.

But I think there is a misunderstanding. My monthly contribution does not reflect my personal usage, it's just the deal I have with my boss so I can get a new car!

I would estimate that usage is 50% personal/ 50% business. But I pay the majority of the monthly cost- hence the unfairness that I'm taxed over and over.

does the above make any difference?

Expert:  bigduckontax replied 2 years ago.
I would tend to agree that the tax treatment as it stands is inequitable. You will have to negotiate with your employer for 50%, which seems to reflect personal usage, to be appropriately adjusted through the payroll system. I would submit that 50% could be taken off your salary. The matter will then adjust automatically through the PAYE system.
bigduckontax and other Tax Specialists are ready to help you
Expert:  bigduckontax replied 2 years ago.
Thank you for your support.

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