|
My son and my daughter-in-law both have middle sized company cars. My d-i-l has it purely as a perk, doing virtually no company mileage. However my son does do quite a lot of business miles. Under the new tax regime she will pay much less in tax, but he will pay more. Something haywire there?
|
|
Yes, Uncle Gordon's brain
|
|
|
The taxable benefit in kind has always been if your employer provides you with a car for private use. The amount you use the car for business should have nothing to do with the matter. The new rules are a long overdue correction of a previous political fudge.
Paul R
|
|
|
New system is crazy. I drive about 40000 necessary business miles per year ( if I don't, I get sacked ! ) and about 5000 private miles. Absence from home means that I have to fund a second reliable car for my wife to cope with the children for school, clubs etc. Under the new scheme I get taxed to bits. A friend has a car as a perk and all fuel paid, commuting 50 miles each way to work each day, his business miles are negligible yet he will now be better off under the new scheme. Does this make sense - I think not !!
I have been forced to give up the company car and fund my own instead, although this should work out financially a little better off I don't like the idea of supplying my own car and all the risk that is involved for company use. How many out there would consider buying their own desk or PC for company use as satisfactory.
Cheers,
Pete
|
|
I'm in exactly the same position, although to keep my tax bill about the same I could have opted to go from an Omega Elite to a Focus/Astra sized car - no thanks for my 25k miles per year. I've bought my car own car also and am making sure I can offset as much cost as possible against my tax bill! I guess you are doing likewise!
|
|
It's a condition of my job and accepting a company car that I take it home, clean it, wash it etc. Even if I take the company car home and use my wife's car for all private mileage I would still get taxed. There is no choice.
|
|
|
|
Pete
I do sympathise that your tax position has changed, through no fault of your own and as I have said elsewhere I am no big fan of this government, but I cannot agree that the new system is crazy.
Again as I have said elsewhere the tax charge relates to you being provided with a car that is available for private use, in the past this has been reduced because you do lots of business mile but there is no logical reason why this should be so, a car is either available for private use or it is not, the business use has no bearing on this. In the past you have not been taxed as heavily as other people and this is not going to be allowed to continue.
You have done the sensible thing by returning your company car. Make sure you claim all the tax relief you can for your motor expenses and I do hope you find yourself better off. Keep good records and if you find you are worse off you should take this up with your employer.
Regarding your comment about buying your own desk or PC I think you are missing the point, if you did have to provide these tools of the trade for work then you could claim tax relief for them, if you are provided with something that is useful privately the otherside of the coin is that there is a tax implication.
Regards
Paul R
|
|
|
|
A lot of companies, incl mine, are now setting up private lease contracts with the lease firm and the driver to avoid some of the taxes. It also means you can chip in extra yourself and have a better car.
Are there any pitfalls doing this and surely Gordon Blair (!) will soon close the loophole?
|
Guy,
Don't know the details of your scheme but one similar I do know about.
The pitfall is that in order to have some fallback position in case the employee leaves voluntarily or sad to say otherwise then the company has to give some sort of backup so that the employee is not left with a contract they cannot manage to fund. The consequence of this is a limitation of choice to a restricted list and leasing companies where cars could easily be found another home.
In the end the advantage to the employee is none, it's just a pain, and I can see this loophole being shut pdq. In which case its a dead end to go down in my opinion..
Now if you get the real chance to opt out and do your own thing with an allowance I reckon that would be more interesting, but maybe the tax advantages to the company are less.
As for the change for high mileage drivers. Presumably the Government thinks we used to swan about in order to put up the miles to get the better allowance. Don't think resources in most companies allow that these days.
Another anomaly which peed me off was that overseas mileage did not count towards the allowance only mileage in UK. Soemone explain the logic of that one. Eg if you need your car to take a lot of technical kit into near Europe and its not practical to check it in or send it air freight why can this mileage also not be allowed. Seems the tax man applies the law to his own ends. Just as with duty paid booze and tobacco allowances.
Stuart
|
|
|
|
|
Paul, I know I'm a bear of very small brain, but I don't follow. How can this be a long overdue correction when it appears to compound any previous anomaly? I sympathise with Pete.
|
Colin
The old business mileage adjustment was about as logical as saying that a bus driver should have a tax concession for his private motoring because he spends all day driving his employers vehicle!
The tax charge has always been for a vehicle being provided for private use, the amount you use the car for work should have nothing to do with your personal tax liability. This will be the case under the new system.
I am no great fan of this Government or the tax system in general, but I can't see any valid argument against this point.
Regards
Paul R
|
Colin
To add a further comment - If your d-i-l tax charge is coming down and your son's is increasing, I presume they will then be paying a similar amount, which is as it should be if they are provided with similar cars that are both available for private use.
Regards
Paul R
|
|
|
|
|
The other side of the coin is that now I run my own car the tax authorities DO take into account the difference between my private and business miles in calculating tax relief. For example if I do 80% business miles then I can claim 80% of expenses ( loan interest etc ) as tax relief. Why then is this not OK when the company car is considered. I now drive a frugal Toyota Avensis rather than the SAAB 9-3 I would have liked - I could not afford this car if supplying it myself although some colleagues do this to 'fund their hobby' but it does cost them money. My driving habits have changed immensely - I get an average 43 mpg and have just replaced front tyres at 46000 miles. Perhaps this is the desired effect.
|
|
|
If you use your own car for business, from April 2002 you can claim 40p a mile tax free from your employer for up to 10,000 miles, and 20p a mile thereafter. So there is a tax concession.
HJ
|
|
|
