Company car tax question

MrPez

I am thinking of getting a company car with a reduction in my salary.
I have two jobs, one NHS full time and another part time for a family business. The car would come from my part time job. I spoke to HMRC and they said that getting a car is entirely down to the discretion of the employer so there shouldn't be any problems there. Unfortunately they didn't know about anything else that I asked!
I earn under the £8500 threshold in my part time job so shouldn't have to pay tax on benefit in kind or what ever they call it, and I would have to provide my own fuel, the only problem I can see is that the director is my dad and I read somewhere that being family can cause complications. I have pay slips for years to prove that I have worked there for a long time, would that be enough to convince the revenue?
Is there anything else that I am missing? It just seems that there is a lot to gain!
Also, is it any business of HMRC if I then use the car for my NHS job or is that just between me and the employer that provides the car?
Thanks, getting advice from the HMRC website is hard work!

zygurat789

The £8,500 threshold includes both salary paid and the benefit in kind on your car.
The problem you enviseage is that if your job and car are not expenditures incurred in the company's business then this expenditure may not be allowed as a deduction against the company profits. But that wonn't be your problem.

MrPez

With the car and salary I should still be under the 8500 threshold so that bit should be ok.
Even if the car and expenses can't go through as normal expenses, there still isn't a problem provided there is no vat reclaimed, is that right? The company won't incur any additional costs will they?

MrPez

Admittedly, there wouldn't be any business motivation to provide me with a company car, but is that any business of HMRC? The way I understood it, it is entirely down to the discretion of the employer to make decisions on whether or not to provide company cars. Aren't there loads of people out there doing office jobs with no work travel driving company cars? The way I see it, if I weren't related to the directors there wouldn't be any problem as far as HMRC are concerned. Maybe I'm missing something...

TM1976

MrPez wrote: »

I earn under the £8500 threshold in my part time job so shouldn't have to pay tax on benefit in kind or what ever they call it,

You still have an benefit in kind and you will still have to pay tax on it, it just won't be deducted from payroll.

MrPez

Thats what I was expecting, thats why I've never bothered to look into it before. But I asked that very question when I rang the revenue and was told they only include income from the employment where the car is coming from. Maybe he got it wrong though, he didn't seem overly confident!

MrPez

Ok, so I rang the revenue again, and, while she seemed to be going out of her way to be unhelpful, I was assured that I would be considered as an employee in my own right and my dad would not suffer any tax on my company car.

One question that she couldn't (or wouldn't) answer, though, is what happens at the end of the term? If I were to buy the car from the business, are there any rules that dictate how much the business charges? And would there be any tax to pay?

TM1976

The rate paid should be as it would be in an arm's length transaction - ie if you had no relationship with the seller. If you get a discount below the real value of the car you should pay tax on this.

This is fairly judgemental because the price of the car varies depending on condition/when/where you are selling is/who you are selling it to (dealer vs private vs broker) so there is a possibility to use this to your advantage however if you are say buying a car for £5,000 that is clearly worth £8,000 then there should be some tax to pay.

MrPez

What happens in the situation of HP? The route I would likely take would be to pay a lump sum towards the car at the begining and then pay the balance over the term and then a final payment at the end. Would that still be classed as the company selling the car to me?