Hello
Can I reduce my company car tax liability by owning another vehicle for my "private" use ? I am considering buying a Nissan Sunny for £ 100 from a friend who has owned it since new ( 1988 ) for this purpose
Any thoughts on this ?
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No it won't make any difference. You get a company car and you pay the tax for it is the principle! The extent of private use of the company car is not taken into account.
regards
john
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Frank. I think you will find that, unless your Company charges you for fuel used privately, the Inland Revenue may tax you some extra for a "benefit in kind". I could be wrong on this as things might have changed since I handed in my Company car on retirement. If you can prove that you never use the Company car privately (difficult) the Sunny might be a cheaper option.
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A company car is no longer the perk it was years ago due to what some drivers might call punitive tax measures! If there is not a lot of business use involved it is best to do without a brand new vectra or whatever and make do with your own car and if possible claim mileage allowances. I know a few people who have refused company cars!
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There's a wealth of information at FleetNews.co.uk.
Did I read somewhere that company cars were introduced instead of salary increases as the government didn't want higher salaries driving inflation? However, this will have been 30 to 40 years ago.
There are some car tax calculators and advisors at Fleet News (or at least links to them) to establish what you'll be best doing. Some companies offer cash-for-car schemes. However, most of the efforts are concentrated on stabilising an employee's tax liability and reducing that of the employer. . .
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The benefit in kind applies to cars that are 'available for private use'. The Revenue don't normally accept that a car is not available for private use if there is any evidence that you take it to your private address.
You would need the support of your employers to the effect that any Company owned vehicle you drive is merely a 'pool car'.
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Paul,
Exactly. In theory if you can prove you do not use the car for private use (and remember private use INCLUDES driving to and from work, so you'd have to leave it at work) then you wouldn't have to pay the tax for benefit in kind. Even those with company vans pay tax if they take the van home at night. Also, is it likely the revenue will believe that you actually drive around in a £100 Nissan when you have the use of a nice new company car?
Regards
John
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What you are saying then is that If I leave my Company Vehicle at the office and drive the two miles to & from there in a £ 100 nissan, I can avoid paying the tax on the Benefit in kind of the company car ?
Its worth a try, as the extra tax I pay for the Audi A6 I drive amounts to well over £2000 a year
I don't require it at weekends as I can use my partner's BMW Z3 which is a far more exciting way to get around. I will investigate this.
I hear also that the way the tax is calculated is about to change, it was always cheaper if you drove over 18000 miles per year, however the plan is to multiply your mileage by an arbitary figure derived from your vehicle's exhaust emissions. This will have a huge impact on higher mileage drivers, looking at used car supermarkets, they sometimes have vehicles less than 2 years old with over 100 000 miles on them, how the hell can anyone rack up such a mileage ?
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It is very easy to build up a high mileage. My wife's car covered 80000 miles in three years - she isn't a sales rep and her job doesn't demand driving. An average daily mileage of 175 will soon meet 100000 over two years.
If you live 2 miles from where you work is there any public transport alternative - or even a walk?
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Yes, company car tax is now based on carbon dioxide emissions in addition to car value, and there are no reductions for exceding any business mileage 'targets'.
In theory you need to convince the revenue that the car is used solely for business, with zero private use. This may not be easy. If you leave 'your' company car at the office I would guess you'd still be taxed. It will be viewed by the revenue that the car is allocated to you and therefore you have the use of the car for private uses. As a previous correspondent said it needs to be a pool car, and if you're the only driver it clearly isn't. The other point to watch is insurance. Pool cars won't be covered for any private mileage, only business use, whereas a car allocated to you as a company car will be covered for private use. I've dropped out of a company car scheme a couple of years back, but I'm fairly sure the principles haven't changed. I imagine if this car is in any sense allocated to you, you'll have a difficult time avoiding it being clasified as a benefit in kind. You can only try.
That said an Audi A6 for £2k/year looks damn good value to me - it can't cover the depreciation never mind anything else! I never complained about the tax bill - it was a fixed cost, I never had to worry about tax, insurance, any bills for servicing , tyres, depreciation etc. and it was a perfectly acceptable cost for driving round in a good car.
Regards
John
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Frank,
You will need the co-operation of your employer. The tax charge is triggered by a
declaration from them to the Revenue that a car is available to you for private use.
For their own protection (from PAYE audit) your employer will only support your
claim if there is a clear procedure that ensures the car is not available to you privately.
You are right that the way the tax is calculated is about to change - from06/04/2001 in
fact. In general company car drivers who do higher mileage?s on business will find
their benefit in kind increases substantially.
Most people will find it is more tax efficient to negotiate extra salary/car allowance,
buy their own car, then claim mileage expenses from the employer for business travel.
The expenses can be tax free provided they are within quite generous levels specified
by the Revenue. You may want to investigate this yourself.
Regard
Paul
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What about the tax position on a car allowance.
If I need a car for business purposes but negotiate a monthly payment of a car allowance instead of using a company car, is there any tax break?
Can I receive any of the car allowance as "tax free".
As you have said, a mileage allowance is tax free (up to generous limits) but if I have a monthly car allowance to provide myself with a car and then receive a lower mileage allowance to cover fuel consumed, then why should only the mileage allowance be tax free?
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I have made investigations, and our company is looking at just such a plan, where we are given a monthly allowance and we negotiate a "private" leasing deal with Arriva or one of the leasing companies on Full maintainence. then claim back our company mileage. should enable me to get a quality smaller car such as Merc C class or BMW 3 series, Current A6 is the old model - really an Audi 100
Shall forget about Nissan Sunny, Honest john says they are crap.
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Most £100 cars are - not just Sunnys!
For two miles- why not walk?
Regards
john
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A bicycle would be quicker - maybe even than the car.
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Lewis,
Most employers will add a car allowance to your salary and treat it as taxable income
under PAYE. If you then receive lower mileage expenses just to cover fuel, you can
claim the difference between the Revenues mileage rate and the expenses you have
received as additional tax relief direct from the Revenue.
Regards
Paul
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That's what I do, which may well surprise a few people out there.
HJ
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By that's what I do I meant if the journey is less than two miles I walk.
HJ
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Damn...I thought you meant you drove a £100 Nissan Sunny!
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