NHS LEASE CAR NET DEDUCTION

jimmo

Jeremy535897 said:

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. 

Not in the case of cars I fear.
EIM23060 - Car and car fuel benefits: fair bargain - HMRC internal manual - GOV.UK (www.gov.uk)
It sems to me that if the lease contract is between the NHS and the lease company then the car benefit scale charge needs to be calculated taking the employees contributions into account. 

Jeremy535897

jimmo said:

Jeremy535897 said:

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. 

Not in the case of cars I fear.
EIM23060 - Car and car fuel benefits: fair bargain - HMRC internal manual - GOV.UK (www.gov.uk)
It sems to me that if the lease contract is between the NHS and the lease company then the car benefit scale charge needs to be calculated taking the employees contributions into account. 

That's why I said "not normally", because for most benefits it is true. If an employer pays a gym membership, the benefit is the cost to the employer (who has done a good deal for taking multiple memberships), not the cost the employee would have paid if taking out the membership personally. For certain benefits like cars, that rule is overridden by a scale charge, but I'm not clear quite what the benefit in kind is here, given OP says that the cost of the lease is taken out of his net pay, so he is bearing the full cost. That only makes sense if the lease is in his name, not the NHS, but then why is a car benefit applicable at all? Why would you want to take up such a lease if the tax downsides far outweigh the benefit of slightly reduced lease premia?

Altior

Overview – Provision of Company Car

Where a car is provided to an employee/Director, by reason of their employment, and available for private use then a benefit in kind arises, requiring declaration on form P11D. This applies whether a car is purchased or leased by the company. If the purchase invoice or finance lease is in the name of the company, not an individual, then it will be deemed to have provided the car to the employee. Cars owned by third parties that are made available to employees can still give rise to a car benefit if they are made available by reason of the employment.

Charging all the car costs to the DLA and not claiming capital allowances will not stop a car being a company car for P11D purposes. A P11D requirement will arise, see the points below for how the benefit can be mitigated. Inclusion of the vehicle and related costs/allowances should be accounted for in the accounts and CT returns.

Employee Contributions

If the employee makes payments to the company in respect of that car, even of the full value of costs incurred by the company, it does not mean that a company car has not been provided for P11D purposes. A P11D benefit still arises, with relief against the benefit only available in two ways:

1. Capital Contributions – limited to a one off of £5,000 per company car, this reduces the list price on which the car benefit is charged
2. Private use – where an employee is required to make payments to their employer, as a condition of the car being available for private use, payments made in the tax year can be offset against the P11D benefit charge

Written agreements between the parties, setting out the nature and terms of any employee contribution relating to company car provision, are advisable.

jimmo

Jeremy535897 said:

jimmo said:

Jeremy535897 said:

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. 

Not in the case of cars I fear.
EIM23060 - Car and car fuel benefits: fair bargain - HMRC internal manual - GOV.UK (www.gov.uk)
It sems to me that if the lease contract is between the NHS and the lease company then the car benefit scale charge needs to be calculated taking the employees contributions into account. 

 I am struggling to understand the logic of these arrangements. Why would you want to take up such a lease if the tax downsides far outweigh the benefit of slightly reduced lease premia?

Me too. As far as I can see the employer leases a car and supplies it to the employee. Hence the scale charge but if there is a logical explanation for such an arrangement its beyond me.. 

Jeremy535897

That's why I linked a copy of the booklet on the NHS lease car scheme earlier. It only makes sense if there is a salary sacrifice, which is what that booklet talks about. Then there is a car scale charge. I took exception to the concept that you could be charged a benefit simply because your employer has better purchasing power than you do, as the earlier post implied. As your link explained, the cost to employer rule is disapplied where there is an entirely separate statutory regime for the benefit concerned, like cars, not because the employer has more buying power.

Altior

It is logical as the use of the car isn't tested. So could easily be abused, and have a discounted vat free lease car through the 'back door'. Even out of net salary, that could be very beneficial for certain cars. 

For the employee, obviously it's a judgement call based on the implied savings of having the use of a lease car supplied by their employer.