Employer charging me half the VAT on my company car lease

Herringbone

Hi all, trying to educate myself so don't worry, I'm not going off on one

My employer provides me a car, which they have leased. It's all in their name. I'm aware of all the BIK etc, and how this affects my income tax allowances - that side of things is all sorted. What I don't know much about is this:

They make a deduction to my salary each month amounting to 50% of the VAT they pay on the car lease. Their explanation is that this is irrecoverable by them due to private mileage being involved. I've done a bit of amateur research and, yes, I can see that THEY can't recover all the VAT, but I'm just trying to clarify whether it's right that I should have to pay it.

It may well be that this is perfectly normal, but I just wanted to check - I've taken a car allowance before so not had this to deal with.

Thanks, all.

00ec25

it is an employment contract matter, there is no right or wrong.


They are, as you know, unable to recover 50% of the VAT. That means it costs them money, they have chosen to pass that cost on to you.
You may choose to negotiate with them that they don't. They may choose to ignore your request - you may choose to go on strike as a way to force them to accept your request.

Herringbone

Thanks, that makes sense.

Is it something I have any grounds to reclaim via HMRC or any other route?

00ec25

Herringbone wrote: »

Thanks, that makes sense.

Is it something I have any grounds to reclaim via HMRC or any other route?

are you personally VAT registered? (not that that actually is relevant - the answer is no)

Herringbone

Thanks for taking the time to help.

dori2o

00ec25 wrote: »

are you personally VAT registered? (not that that actually is relevant - the answer is no)

Personally I think it's wrong of the employer to charge this but that's just my opinion.

There is nothing that can be done in terms of claiming relief from HMRC for that charge as it's not specifically a payment towards the private use of the car.

You need to consider whether the amount you are paying for the car in tax plus the VAT charge is providing you with value for money.

Could you lease/buy the same car yourself including insurance and servicing/maintenance costs for the same amount or less than you are currently paying? Dont forget to also take into account any mileage expenses paid by your employer and tax relief for business miles you could claim from HMRC.

Could you buy/lease another suitable car that meets your needs again also taking into account again insurance, servicing, mileage expenses/relief?

You would need to look at the options available to see if the current option makes better financial sense.

Herringbone

dori2o wrote: »

Personally I think it's wrong of the employer to charge this but that's just my opinion.

This was the part I was enquiring about, and I understand now it's just a matter between me and my employer. They're a good company and I'm sure it's something we can discuss.

Thanks