Car insured through work- a taxable benefit?

Easypd

Hi guys,

I just bought into a business and so am a little skint, but long term its looking good!

When I started, to make ends meet I took on a car the company owned. I paid about £85 per month in tax for this, but turns out the car is very old and only worth about£300! (a battered 02 plate clio that costs £500 pm in fuel!!!)

It is cheaper for me to buy a new one and I pick it up next week and am scrapping the old car.

I was just sorting insurance, when I looked at the old cars docs. Turns out the policy is very general, but also a great level of cover. It actually does not cover a specific car, only any car owned by the business or any car registered in one of the directors names as a personal car (ie: me!)

Now as the business no longer owns any cars, would me using this policy be classed as a taxable benefit or can I assume it is just a perk of owning your own business?

Obviously, I would check the insurance fully covers me etc. (reading the policy, it also covers anyone driving my car with permission fully comprehensive without restriction, so would cover my wife. It also only has a £250 excess, which is better than I can get reasonably priced.

This could save me £35 per month which is a big deal right now for me.

Jamie

Easypd

I think it's called 'fleet insurance'. once the only company owned vehicle goes, is it then a benefit in kind, or could I take advantage?

Nicola_Ed

Hi

Once the company is only insuring your car then yes it will be a taxable benefit. You could repay the company the cost (I pressume the company premium is less than you would pay personally) out of the tax free mileage amount you can claim from the company for businsess mileage.

Easypd

Ok, thanks. So worst case, am I right in saying I could just declare it as a benefit and pay tax on a policy that is still cheaper than what I'd pay privately for some reason? (Prob because I have to declare I do lots of miles....)

I may prefer to claim my mileage, as 45p per mile is quite a good help when I do business mileage. Just a shame I can't claim on my 35000 mile per year commute (or can I get any relief on expenses, such as the 2nd hand car I just bought?)

For the mo, my £600 per month travel wipes out any salary increase and I am very slightly worse off. Keep thinking long term it will be worth it for me and my family though....

Nicola_Ed

Hi

Yes - you can just pay tax on the benefit so it will cost you 20% income tax - there will also be a NI charge for the company. I would always claim for business miles - even in preference to salary - as the former tax free. HMRC view travel from home to work as private mileage so there are no tax breaks for the cost.

Good luck in your new venture - it can be an exciting time!

Easypd

Thanks Nicola

BargainHunters

I would just claim extra mileage from the company which in-turn covers the cost of the personal car insurance. Bearing in mind mileage claims can cover going to training courses, potential & existing customers, potential & existing suppliers, thus easy to create significant mileage claims

dtaylor84

Sounds great -- you can defraud your employer and HMRC at the same time!

Easypd

:rotfl: :rotfl: