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

vaio

As you might have guessed it's not my field but I struggle to see how a company paying for a lease car and then getting all the money back from the employee is a benefit.

Isn't it the same as paying union subs/child support/student loan? Employer pays the bill and takes the full cost from the employees wages? Where is the "benefit"?

LandyAndy

jaybeetoo wrote: »

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

Only if the loan exceeds £5000.

InsideInsurance

vaio wrote: »

As you might have guessed it's not my field but I struggle to see how a company paying for a lease car and then getting all the money back from the employee is a benefit.

Isn't it the same as paying union subs/child support/student loan? Employer pays the bill and takes the full cost from the employees wages? Where is the "benefit"?

I hadnt notice you mentioned taking it from the net salary, with large companies it is taken from the gross and therefore there is the benefit in the form of NI and Tax savings.

Looking at the HMRC calculator you can add private contributions towards private use into the calculation and anything taken from the net salary would be considered such. It still counts as a company car (so reduced mileage refunds) but it does reduce the BIK (and may eliminate if payments are high enough)

zzzLazyDaisy

vaio wrote: »

As you might have guessed it's not my field but I struggle to see how a company paying for a lease car and then getting all the money back from the employee is a benefit.

Isn't it the same as paying union subs/child support/student loan? Employer pays the bill and takes the full cost from the employees wages? Where is the "benefit"?

No it is not the same thing at all.

In the case of your examples, the employee has an independent personal liability for the payment and the employer merely acts as an intermediary in ensuring the payment is made to the relevant authorities.

But if the employer buys or leases the car and allows the employee to use it in return for payment, the rights and responsibilities for the car remain the employer's, and it is allowing the employee to have the benefit of the vehicle, albeit for a payment. Under HMRC rules this benefit must be declared, even if there is no tax to pay, and the employer must account for the vehicle and the payments in its accounts.

In any event, the cost of the lease, and the value of the benefit to the employee for tax purposes are unlikely to be exactly the same because HMRC uses a formula for calculating taxable benefit which is much more complicated than simply recording the cost of the lease payments.

sunshinetours

LandyAndy wrote: »

Only if the loan exceeds £5000.

This will be £10k from 6/4/2014 which give employers a bit more flexibility with employees

It is total of all loans to that person at any point in the year aswell

It will be possible on OP's question to reduce down the taxable benefit to zero but as others have said reporting requiremnts won't change. Employer would be responsible for the lease however not employee so potential issues if employee leaves or doesn't pay for any reason