Can a company pay for a private use car for an employee?

CavemanUK

Hi,

I would like to lease a car for private use. My credit history is flakey from past debts and my boss/friend whom I have worked for for over 4 years has suggest organising the finance through the company for which i would pay for it by being deducted from my wages.

Are there any reasons we cant do this? Its a private car and wouldnt be used for business. Just the monthly payments would be via the company but I would be paying for it in full myself.

Any help greatly appreciated

jaybeetoo

It will count as an employee benefit so you (and your employer) will have to declare it to Revenue & Customs. It should appear on your P11D.

InsideInsurance

It would almost certainly be deemed a company car and so in addition to you having the lease payments removed from your salary you'd also get Benefit In Kind tax to pay. See http://www.whatcar.com/company-car-tax to work out how much extra you'd have to pay.

forgotmyname

Easier to have him as a guarantor for you?

vaio

jaybeetoo wrote: »

It will count as an employee benefit so you (and your employer) will have to declare it to Revenue & Customs. It should appear on your P11D.

InsideInsurance wrote: »

It would almost certainly be deemed a company car and so in addition to you having the lease payments removed from your salary you'd also get Benefit In Kind tax to pay. See http://www.whatcar.com/company-car-tax to work out how much extra you'd have to pay.

I wouldn't have thought there would be any P11D/benefit in kind implications given the OP will be paying the full cost of the lease and presumably all other running costs of the car.

jaybeetoo

vaio wrote: »

I wouldn't have thought there would be any P11D/benefit in kind implications given the OP will be paying the full cost of the lease and presumably all other running costs of the car.

Without knowing the vehicle list price with extras, fuel type, CO2 emmissions, monthly finance costs and the amount the employee is paying towards the car, it is hard to say. As it is a benefit in kind, it has to be declared to Revenue & Customs even if it turns out no tax is due. The employer may also end up with an extra NI bill unless they do it as salary sacrifice.

The OP may have problems getting insurance for the car.

vaio

Surely all you need to know is that the OP is paying the full cost of the car which I'd have thought would remove it from the benefit in kind area. £500 a month cost of lease, £500 deduction from OP's net wages, no cost to company so no benefit to employee

If they are planning a salary sacrifice scheme then, as you say, that's a whole different ball game

jaybeetoo

vaio wrote: »

Surely all you need to know is that the OP is paying the full cost of the car which I'd have thought would remove it from the benefit in kind area. £500 a month cost of lease, £500 deduction from OP's net wages, no cost to company so no benefit to employee

If they are planning a salary sacrifice scheme then, as you say, that's a whole different ball game

The benefit for company cars is worked out as shown here http://cccfcalculator.hmrc.gov.uk/CCF0.aspx

It is based on the list price of the car, CO2, fuel type and employee contributions.

They need to do the maths on whether there is any employee tax to pay.

Whether there is an employee tax liability or not, the employer has to tell Revenue & Customs.

As the car is leased by his employer, the OP will find it hard to get insurance in his name so the employer may have to take it out. The employer would have to tell the leasing company what they are doing - the leasing company may object.

As the employer is providing a benefit (taxable or not) it attracts employer NI.

This is not simple and the employer should consult their accountant.

Another way to do it would be for the employer to provide a loan - again this would be classed as an Employee Benefit subject to tax and NI.

Finally, the employer, could lend the employee the money as a friend (not an employer!).

Ich_2

I think what the OP is talking about is an interest fee loan from the company to purchase the car which will be in his name.
A whole different concept from a lease agreement

jaybeetoo

Ich wrote: »

I think what the OP is talking about is an interest fee loan from the company to purchase the car which will be in his name.
A whole different concept from a lease agreement

That would appear to be a simpler way of doing it. It will still attract a tax and NI liability.

InsideInsurance

vaio wrote: »

I wouldn't have thought there would be any P11D/benefit in kind implications given the OP will be paying the full cost of the lease and presumably all other running costs of the car.

This is how the company car scheme works in many big companies which have flexible benefits and they do appear on PD11/BIK