Benefit in kind query

I would have thought that it was good for you as your employer has been detached from the type of car and the tax penalty of the type of car. Basically you have been given a non pensionable salary increase which it has been suggested that you spend on providing yourself with a car.

What happens if you choose to buy a 4 year old car rather than lease a new car and use the extra money to pay for your car that way.

Derek

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Mike

My first thought is that the "re-imbursement" or whatever it is dressed up to be is remuneration and therefore liable to PAYE.

Therefore following your comments which appear to say that your employers will reduce your salary by the amount of tax previously paid on the benefit in kind will leave you worse off.

Oh, by the way - you will be meeting the day to day running costs of the car no doubt eg insurance/petrol/possibly maintenance.

If you undertake business mileage will you be re-imbursed and at what rate???

Mike

I moved my car from the business to personal ownership for tax reasons. I certainly don't mind invoicing myself for 40p a mile - it works out much better for me. I don't have to collect VAT reciepts for the car expenses & petrol either. I did get the car serviced with new tyres all round just before I transferred it though

Thanks for the replies so far: to clarify, the car MUST be brand new: I will own the car and my employer will cover my lease payments which include insurance, servicing etc: if I leave service the business cover will cease even though I maintain the lease payments: I will be re-imbursed for business mileage: the view is that as I will not have a BIK as I own the car, its fair to deduct the "saving" this would have represented leaving me no worse off....this bit seems off to me..

If I leave of my own accord the car comes with me or I can terminate the agreement by buying it...

Regards

Mike

Spending money I don't have on things I don't need.

What was the previous state - I assume you were provided with a car and was taxed according to it's value and emissions and was also liable to NI as well


How does your net take home pay compare with the old situation?

Derek

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Derek

Correct on all counts: my take home pay will be the same as my employer is taking the BIK tax that I am not paying......

Regards

Mike

Spending money I don't have on things I don't need.

quote:

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Originally posted by mike lacey:
my employer will cover my lease payments which include insurance, servicing etc:

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For the avoidance of any doubt - this will represent taxable income and will be taxed accordingly (be it as salary or benefit in kind).

Mike

quote:

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Originally posted by mike lacey:
I will own the car ... if I leave service the business cover will cease even though I maintain the lease payments

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You will bear the risk now.

Mike

quote:

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Originally posted by mike lacey:
my take home pay will be the same as my employer is taking the BIK tax that I am not paying......

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This simply cannot be right - see my preceding posts.

Mike

Mike - I think that you are being cheated, this action sets a precedence that when the Tax charged for cars is increased again - your employer will further reduce your net pay on the pretext of retaining the BIK.

Is this policy being applied to employees in the company that has taken over your company.

Is it standard practice amongst other companies in your line of work.

It appears as if your HR (Attrition Management) deptartment is attempting to convert the employee side of the business from a cost centre to a profit centre by introducing cost saving meaasures that do not do any good for the employees. Has there been an increase in the movement of employees from being permanent to temporary agency employees for example

Do you need your car for the job or is it a perquisite car. If the business mileage is low why not consider leaving the scheme and funding your own car and charging the appropriate mileage rate and also claimimg tax relief for the difference between the amount paid and the amount allowed.

Another thought - as the car is now deemed to be a privately owned or financed you should be able to claim tax relief for the difference in the mileage amount paid and the IR Mileage allowance

or if the business mileage is significant proportion of the total mileage for the car then request tax relief on a proportion of the Leasing and servicing costs

Check out the Company Cars document on the IR site to see what options you have with using a private car for work

Apologies for the ramble, I hope that there are not to many red herrings in the above

Derek

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Mike

quote:

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This will save us benefit in kind ( BIK ) costs. It is proposed that, as we are not paying BIK, they can deduct from us our BIK saving, so that it is "cost neutral"...

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Cost neutral to whom?

Is this deduction before or after tax?

I am not a tax lawyer or accountant so I suggest you and your colleagues consult one.

If you are being paid any sum of money by your employer you will have to declare it on your tax return - what if the Inland Revenue decide you still have some liability?

cheers

Nigel

It sounds to me like one way or another your getting a good old fashioned shafting....

bottom line you pick up some risk yet get no financial benefit.. and the company reduces both its cost (assumption based on - why else would they be doing it? if they want to claw back any BIK reduction it sure as hell isnt for you!?) and risk.. very neutral!?

shame... when all parties play ball fairly there are some top schemes out there..