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  • FIRST POST
    • smjxm09
    • By smjxm09 8th Aug 18, 7:08 PM
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    smjxm09
    Legally avoiding company car tax?
    • #1
    • 8th Aug 18, 7:08 PM
    Legally avoiding company car tax? 8th Aug 18 at 7:08 PM
    My son is being promoted in a job he has been in for 6 months and will get a company estate car so he can visit customers. He has found out the car can be used for personal use at 10p per mile to cover fuel.

    He is paid from the moment he drives off even if he drives to the station to catch a train to London to work.

    Now as my son has his own car with 6,000 miles on the clock and doesn't want the use of the company car for private use. The company car also comes with a tracker so it could prove no private use.

    Is there a way to avoid being taxed on this car as the wage rate is still low at £18,000 per year as he doesn't want to lose the benefit of his pay increase?
    Last edited by smjxm09; 08-08-2018 at 7:11 PM.
Page 1
    • Dazed and confused
    • By Dazed and confused 8th Aug 18, 8:31 PM
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    Dazed and confused
    • #2
    • 8th Aug 18, 8:31 PM
    • #2
    • 8th Aug 18, 8:31 PM
    Company car tax is not based on use.

    It is being available to use which counts. This is a difficult hurdle to overcome as it will inevitably result in additional work (hassle) for his employer to prove this If it is even possible.

    Has he gone to the trouble of working out how much tax might be involved?

    Depending on the cars price (official list price not purchase price or current value) and emissions level it may be less than he imagines. Unless he has income not disclosed in your op then the benefit would likely be taxed at 20% (unless he is Scottish resident for tax purposes).
    • 00ec25
    • By 00ec25 8th Aug 18, 8:47 PM
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    00ec25
    • #3
    • 8th Aug 18, 8:47 PM
    • #3
    • 8th Aug 18, 8:47 PM
    not what you want to hear but no you cannot avoid being taxed on the car.

    what people often fail to grasp is the rule is based on whether the car is available for private use, not whether it is used for private use

    the only way a car is judged to be not available is if it is kept at the employer's premises overnight and so your son would have to drive to the office to collect his car each morning then return to the office each night and leave it there. He cannot take it home at the weekends because the second it is sitting on his driveway at home it is available for private use.

    the point about paying for private fuel is that eliminates the additional BIK for having free fuel. It does not in anyway impact the BIK for the car itself. If your son does not want to pay tax on the BIK he will have to give up the car and try to get his employer to pay him a cash "car allowance" instead and use his private car for business use.

    also your post is a little unclear re him being paid from the moment he leaves home. Being paid for what?
    If he drives to the office that is commuting and he would have to repay that at 10ppm to avoid the fuel BIk for such private use as commuting is always taxable.
    • smjxm09
    • By smjxm09 8th Aug 18, 10:03 PM
    • 532 Posts
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    smjxm09
    • #4
    • 8th Aug 18, 10:03 PM
    • #4
    • 8th Aug 18, 10:03 PM
    Thanks for the info. His company is based up north and he will be a southern based engineer who would and could not travel to his HQ.

    He is hourly paid so is paid once he sets off from home as traveling to customers is classed as being a at work.

    I used to be a BT engineer with a small van who was based at home.
    BT had some sort of arrangement as I was not taxed on the vehicle but then private use was a sackable offence. I was hoping this could have applied to my son where his company just banned private use with his agreement to save his tax bill.

    It feels like he will be taxed on a tool of the job that he doesn’t want to use outside work.
    Last edited by smjxm09; 08-08-2018 at 10:06 PM.
    • Dazed and confused
    • By Dazed and confused 9th Aug 18, 7:07 AM
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    Dazed and confused
    • #5
    • 9th Aug 18, 7:07 AM
    • #5
    • 9th Aug 18, 7:07 AM
    You are comparing apples and pears.

    Vans have their own rules.
    • smjxm09
    • By smjxm09 9th Aug 18, 7:24 AM
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    smjxm09
    • #6
    • 9th Aug 18, 7:24 AM
    • #6
    • 9th Aug 18, 7:24 AM
    I know what you are saying but as far as I was aware the van was based on a car so was treated as though it was a car except for road tax purposes. The van was a Vauxhall Combo which was based on the Corsa not that this would appear to make a difference in my sons situation.
    Last edited by smjxm09; 09-08-2018 at 7:29 AM.
    • prowla
    • By prowla 9th Aug 18, 7:45 AM
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    prowla
    • #7
    • 9th Aug 18, 7:45 AM
    • #7
    • 9th Aug 18, 7:45 AM
    Could the company give him a letter saying the car is not available for personal use?
    • chrismac1
    • By chrismac1 9th Aug 18, 7:50 AM
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    chrismac1
    • #8
    • 9th Aug 18, 7:50 AM
    • #8
    • 9th Aug 18, 7:50 AM
    If the car is on his drive for one day that is a taxable benefit in kind. It is not use, but availability, which counts here. Slam dunk.
    • pjwhit
    • By pjwhit 9th Aug 18, 1:42 PM
    • 8 Posts
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    pjwhit
    • #9
    • 9th Aug 18, 1:42 PM
    • #9
    • 9th Aug 18, 1:42 PM
    If the car is on his drive for one day that is a taxable benefit in kind. It is not use, but availability, which counts here. Slam dunk.
    Originally posted by chrismac1
    This.

    The argument is, as Chris says above, availability. I would always ask this one simple question to prove availability.

    You're in the house, its late at night and you only have the company car on the drive. There's an emergency and you need to travel 3 mile down the road to the hospital. No taxis are available for at least an hour.

    You wouldn't think twice, in fact you wouldn't have even tried a taxi, You'd grab the keys and use the car. And that's why its seen as available. Even if its never used, you have the benefit of an additional car sitting to be used if needed.
    • choccielover
    • By choccielover 9th Aug 18, 10:23 PM
    • 393 Posts
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    choccielover
    OP try reading EIM 23400 and 23405 they might help
    • smjxm09
    • By smjxm09 9th Aug 18, 11:26 PM
    • 532 Posts
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    smjxm09
    OP try reading EIM 23400 and 23405 they might help
    Originally posted by choccielover
    That's great. Seems that indeed a company car driver can indeed avoid this company car tax and the info comes from the government website.
    • Dazed and confused
    • By Dazed and confused 10th Aug 18, 6:53 AM
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    Dazed and confused
    So that leaves you back where you started.

    How will his employer police this to HMRC's satisfaction?

    I guess the starting point might be the vehicles insurance but that would mean additional work for the employer making separate arrangements for your son. Will they be willing to do that?
    • 00ec25
    • By 00ec25 10th Aug 18, 7:52 AM
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    00ec25
    So that leaves you back where you started.

    How will his employer police this to HMRC's satisfaction?

    I guess the starting point might be the vehicles insurance but that would mean additional work for the employer making separate arrangements for your son. Will they be willing to do that?
    Originally posted by Dazed and confused
    to be fair I have actually seen it done in practice with as little as the relevant clause in the employment contract

    the real test, as hinted at in the HMRC info, is recording physical non usage.
    In my case the vehicle had a tracker fitted. Its data was frequently saved and a precise mileage log was kept of every business journey undertaken and reconciled against the odometer readings taken each year at the service (vehicles were sold before needing MOT) so "show" that the car had never been used for non business use.
    All of that of course added extra admin burden for the employer so was only offered to "select" people.

    This issue has been examined many times in the context of one person personal service companies, ie where the employer and the worker are one and the same, and the place of employment is the home address. On paper therefore a company car is simultaneously kept at both home and the place of employment.
    • pjwhit
    • By pjwhit 10th Aug 18, 12:13 PM
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    pjwhit
    That's great. Seems that indeed a company car driver can indeed avoid this company car tax and the info comes from the government website.
    Originally posted by smjxm09
    The employer has to agree and change their rules for him only to prohibit him from using the vehicle privately. They then need to put in place evidence that they are policing to ensure that no private usage happens.

    The employer may well refuse to do this seeing as they have a chance of a penalty and charge should it be found that the car has done even one mile of private travel.

    You have to remember that private usage isn't just taking it out on a weekend or doing donuts in the local car park on an evening, Its anything that isn't work related so if he's at work on a Monday evening and he wants to just detour a mile to his girlfriends then he'll have broken the rules.

    The sensible thing to do is sell the Corsa & cancel the insurance, the savings on the insurance alone may well cancel out the CC tax so it's win/win. Plus as the 10p mile is actually to cover the fuel costs hes never going to be out of pocket!
    Last edited by pjwhit; 10-08-2018 at 12:15 PM.
    • pjwhit
    • By pjwhit 10th Aug 18, 12:18 PM
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    • 2 Thanks
    pjwhit
    Thanks for the info. His company is based up north and he will be a southern based engineer who would and could not travel to his HQ.
    Originally posted by smjxm09
    Another quick question, you said your son had worked there for 6 months and is now being promoted? where did he physically work before the car then if the office us up north?
    • smjxm09
    • By smjxm09 11th Aug 18, 12:34 AM
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    smjxm09
    He started off as an assistant engineer and is now actually in his 9th month of employment, even though I thought it was 6, so he has never worked on his own and would be paired up with a southern based engineer each day.

    He is now learning the bits of the job to allow him to work on his own.

    The car does have a tracker so all he can do is ask but as has already been pointed out selling his own car would be the better solution but as dad he does not listen to a word I say.
    Last edited by smjxm09; 11-08-2018 at 12:37 AM.
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