Company car tax and fuel benefit - Threshold?

MrPez

Thanks for your help, I really appreciate it.
Forgive me for being thick though, because I still don't get where the £8500 threshold comes into the equation?
Sticking with the example above, am I right in thinking that the £3150 and £3948 are only added to my wage to find out if my total income is within the £8500 threshold? And if it is within the threshold I only pay income tax on the £1400 wage?
As far as the boss's son thing goes, I spoke with someone at hmrc and was told that as I don't live at the same address I would be considered as an employee in my own right, so I ought to be ok on that front.

jennifernil

"other benefits, such as cars and medical insurance, are taxable only if they are provided to employees earning £8,500 a year or more, or to company directors (regardless of earnings)"

I presume this is the HMRC statement you are going on?

jimmo

MrPez brought all this up last year.
https://forums.moneysavingexpert.com/discussion/2265783=
I have to confess that in exasperation I deleted my posts on that thread.
I won’t waste my time going into technical arguments again but if anybody thinks that daddy can buy a car for one of his children via his company and get the taxman to help out he is very much mistaken.
Equally, a child of daddy cannot buy a car himself and get the taxman to subsidise the purchase by putting it through the family company.
There can be situations where a child of a director holds a position in the company which justifies the child having a company car but how many part time clerks have a company car?

MrPez

Thanks for the info everyone.
Jimmo - you are right, I did bring all this up last year. The reason I am asking again is that I am considering getting a company car again and I was still unclear the last time. I do think you are rather presumptuous to assume that I am trying evade the tax man in any way, and 'daddy' certainly won't be buying me any cars. I have worked for the company for years (and I don't just mean that I have received payslips) and I am simply trying to find out the rules for someone in my position.
In response to your last comment, a company has absolutely no obligation to justify the provision of a company car for any employee. This is to be negotiated between employer and employee.
I was under the impression that this forum was somewhere people could go to ask for advice, and, asside from your comments, people have been very helpful. All I am trying to do is avoid paying unecessary tax. Surely I would be foolish not to?

zygurat789

You are trying to avoid tax which is perfectly legal but beware the threshold of £8,500 has not increases for over 25 years, the car benefit (£3,150) has been increased more or less annually and the fuel benefit (£3,948) increases every few years.
Result - look foreard to annual pay decreases and ever cheaper and more efficient cars until you have to go electric.

ceeforcat

Zygurat789 – you have made a mistake that I made many years ago and is little known:

I thought I would let you know of a case I had many years ago where the BIK and earnings fell below £8500. Not liable for BIK? Wrong.

The inspector ( BD – Jimmo) pointed out:

Paragraph 11.80 of Revenue 480 states:

Note though, certain motoring expense not normally charged to tax must nevertheless be taken into account in addition to the vehicle and fuel benefit charges in determining whether or not an employee is remunerated at a rate of £8500 or more per year (see paragraph 1.7)

Paragraph 1.7 confirms this. In short you must add the motoring expenses associated with the car to the BIK in addition to the salary to determine whether the employee earns more than £8500. It is amost impossible to fall beneath this level as a result.

I never forgot this.

zygurat789

ceeforcat wrote: »

Zygurat789 – you have made a mistake that I made many years ago and is little known:

I thought I would let you know of a case I had many years ago where the BIK and earnings fell below £8500. Not liable for BIK? Wrong.

The inspector ( BD – Jimmo) pointed out:

Paragraph 11.80 of Revenue 480 states:

Note though, certain motoring expense not normally charged to tax must nevertheless be taken into account in addition to the vehicle and fuel benefit charges in determining whether or not an employee is remunerated at a rate of £8500 or more per year (see paragraph 1.7)

Paragraph 1.7 confirms this. In short you must add the motoring expenses associated with the car to the BIK in addition to the salary to determine whether the employee earns more than £8500. It is amost impossible to fall beneath this level as a result.

I never forgot this.

Neither would I if I could find that reference and read it because it sounds a lot like double counting.

Can you elaborate?

MrRedundant

It's fairly logical to me;

If

Salary + Car Benefit + Fuel Benefit > £8500 it's all taxable. If Salary + Car + Fuel Benefit < £8,500 only the salary is.

What role is it you do OP, Hours PW and salary? What car do you want? With these figures we can say yay or nay..

Beware though anyone related to the company or directors may mean that the expense is not deductible to avoid situations likee this.

I personally think your on sticky ground as no tax inspector is going to see this as anything other than an excuse to evade tax on a car for his son.

ceeforcat

Not necessarily that simple Mr. Redundant!

zygurat789 - Found it although it took a while!

http://www.hmrc.gov.uk/manuals/eimanual/EIM20101.htm


Th calculation:

http://www.hmrc.gov.uk/manuals/eimanual/EIM20105.htm


Just a different calculation in determining whether over £8500.

MrPez

Hi again, thanks for all the help, this is all a bit of potential mine field!
I think I'm clear on things now though.
MrRedundant - I work variable hours doing book-keeping and general office admin, usually around 12-14 hours a week.
The car I have been looking at is an audi A3 TDI 170 (08) quattro sport 5dr.
The list price is 23,175, with 148g/km emissions. I would also be contributing about 8,000 towards it myself, which for the benefit of the calculation is capped at 5,000.
So for 2011/2012 the car benefit charge would be (23,175-5,000) x 0.22 = 3,998.50.
The fuel benefit would be 18,800 x 0.22 = 4,136.00.
So as long as my wage is less than 8,500-3,998.50-4,136 = 365.50 per year I would be classed as a lower paid employee?
Also, I would pay all road tax, servicing and repairs myself so they don't need to be included in any calculations?