NHS LEASE CAR NET DEDUCTION

KB8809

Evening all,

I am reposting to this section as advised it is best placed here. 

I wondered if anyone had any advice or can point me in the right direction of someone who can help me.
I have had 3 lease cars via NHS, all have been paid via NET deduction from my salary, meaning I do not gain any tax or NI relief from having the car. My salary is taxed etc as it would be if I didn’t have the car. I have been paying BIK tax on the cars and have only been able to claim the mileage rate for those with a lease car. I have queried this over the years with payroll who tell me it’s right but I am struggling to understand how it could be. If I was paying for the car via salary sacrifice and gaining a reduction in tax and NI contributions I would understand, but why am I paying BIK tax and receiving a lower mileage rate for something that is coming out of my pocket at a rate of 100% with no contribution from my employer! 

Please someone help me! It is driving me crazy. 

Thank you in advance. 

Grumpy_chap

Here is a link to the OP's thread in the Motoring forum
https://forums.moneysavingexpert.com/discussion/6427639/nhs-net-deduction-lease-car#latest

Hopefully the knowledgeable people here will be able to assist the OP.

Jeremy535897

Am I correct in this analysis:

• the NHS lease the car and pay a certain amount for that
• the NHS collect what they pay to lease the car directly from your salary
• that deduction is taken from your salary after tax and NIC has been deducted from your pay so you get no tax relief
• you pay for all fuel put in the car
• you also pay extra tax on a benefit in kind associated with the car, but no car fuel benefit
• you claim only 25p a mile for business miles that you travel
• you pay for insuring, repairing and maintaining the car
• if you had to lease the car personally, you would pay broadly the same amount directly to the leasing company (although the NHS might get some sort of discount for volume of business)
• was the amount of the lease payment determined in part by the mileage you expect to travel (as is the case if you lease directly)?

MikeyPGT

• you pay for insuring, repairing and maintaining the car

Surely this would be included in the lease charge?  The OP is being treated pretty much in the same way that I was when I had an NHS lease car many years ago so I think it is probably correct (if not terribly fair).  Word of warning - it took years to sort out my tax code because of the Benefit in Kind element when I no longer had use of the lease car ...

molerat

MikeyPGT said:

• you pay for insuring, repairing and maintaining the car

Surely this would be included in the lease charge?  The OP is being treated pretty much in the same way that I was when I had an NHS lease car many years ago so I think it is probably correct (if not terribly fair).  Word of warning - it took years to sort out my tax code because of the Benefit in Kind element when I no longer had use of the lease car ...

You were probably paying by salary sacrifice where a BIK does arise.  OP says the are paying from taxed pay.  A completely different scenario, they are paying full whack and getting taxed on it (twice)

KB8809

@Jeremy535897 the lease payment includes insurance and any repairs required. I get 10p per mile! Whereas if I had leased it “privately” I would get the standard NHS rate of 56p per mile. I had to choose an annual mileage allowance which is 15,000 if I go over this then I have to pay the extra miles back. I work in the community in urgent response on 12hr shifts covering 2 localities so do quite a bit of miles. I pay for all fuel myself. I have the finance department looking into this now but I’m not sure what to do if they tell me it’s right. I was always under the impression that having the car taken from NET pay meant I avoided all extra costs such as BIK. That’s why the NET deduction is more expensive than leasing via salary sacrifice.
 P.s sorry for late reply I’ve just finished 3 long shifts! 

Jeremy535897

If you pay all the costs of the lease and get no tax deduction for that, then I don't see what the benefit in kind is, so I agree with you on that. So far as mileage is concerned, it is up to the employer what they pay you. If it is less than the HMRC rates you should be able to claim the difference  between those rates (45p for the first 10,000 business miles, 25p thereafter) and what you are paid for business miles. I think you need to ask why you seem to be so much worse off leasing through the NHS than privately. The literature suggests that the NHS scheme is a salary sacrifice scheme (so what you pay for it does reduce taxable pay):
https://southwestyorkshire.nhs.uk/wp-content/uploads/2018/10/NHS-Car-Scheme-Guide.pdf

KB8809

@Jeremy535897 Exactly I don’t either. How would I go about claiming the mileage via HMRC? I have no idea with things like this.
Yes I have asked the question! I am waiting for a phone call from finance, hopefully they can actually give me some answers this time. I see what you mean with that literature however different trusts offer different schemes. I am with South Tees who offer both salary sacrifice and NET deduction. I would post my contracts to make explaining easier but don’t really want to post personal details online. Thank you for your help. 

Jeremy535897

How you claim for mileage depends on whether you complete a self assessment tax return. If you do, you claim the mileage (at the appropriate rate of 45p or 25p, depending on the business miles), less what you actually receive, in the employment section. If not, you may be able to claim online, but I think you have to get to the bottom of this benefit in kind and net pay deduction before you can progress a claim.

sheramber

Although you pay a lease cost is that cost at a  reduced rate through the contract NHS have with the fleet company.

Could you lease that car privately  for the same rate?  If not, then you are in receipt of a benefit.

Jeremy535897

sheramber said:

Although you pay a lease cost is that cost at a  reduced rate through the contract NHS have with the fleet company.

Could you lease that car privately  for the same rate?  If not, then you are in receipt of a benefit.

If an employer pays for something for an employee, and the employee reimburses the employer with the full cost to the employer, the fact that the employee personally might have had to pay more than the employer did is not normally a taxable benefit.