It is benefits time once again

This is the time of year that employers and employees deal with the reporting of Benefits in kind. Taxing times…

The provision and use of company cars features in many of these returns, both the use of the car, and if provided, the cost of any fuel provided by the employer for private mileage. What may not be appreciated is that there is such an item as an exempt use of a car.

To be exempt, an employee must use the car in one of the following ways:

1. Privately owned cars – You don’t have to pay anything on cars that directors or employees own privately.

2. Cars available for business journeys only – Business journeys are either: journeys that are part of your employee’s duties, e.g. a service engineer travelling to an appointment or journeys an employee must make to get to a temporary workplace. To be exempt, you must tell your employee not to use the vehicle for private journeys and check that they don’t.

3. Cars adapted for an employee with a disability – This includes cars with automatic transmission if the employee’s disability means they need this. These cars are exempt if the only private use is for: journeys between home and work or travel to work-related training

4. Fuel that employees pay for – You don’t have to pay or report on fuel, including for private journeys, if either: employees buy the fuel for their own use or you buy it and they pay you back during the tax year, and their payment is equal to or more than the amount you paid.

5. ‘Pool’ cars – You don’t have to pay or report on ‘pool’ cars. These are cars that are shared by employees for business purposes, and normally kept on your premises. You’ll have to pay if a pool car is driven for private use, or if a car is shared by employees and doesn’t qualify as a pool car.

 

Additionally, if you provide a car to a close relative you won’t have to pay anything if both the following apply:

  • you’re an employer who’s an individual, e.g. a sole trader
  • you’re providing the car to someone who works in your business, but only because they’re a close relative and not because they work for you (e.g. you give your child a car as a birthday present)

 

A close relative includes:

  • your spouse or civil partner
  • your son or daughter, and their spouse or civil partners
  • your parents
  • any other dependants or guests of your household

 

Food for thought?

Share:

Share on facebook
Share on twitter
Share on pinterest
Share on linkedin
Accounting in Sheffield and Doncaster Certificates

Recently Added News

Time to tighten the belt ?

Later this week (27 October 2021) Rishi Sunak will present his second budget during 2021. It is likely that reduced public expenditure and higher taxation

Read More »

New global tax system

To tax multinational companies on business transactions completed in the UK, our government introduced the Digital Services Tax (DST) April 2020. The US response was

Read More »

Related News

Tax Diary October/November 2021

1 October 2021 – Due date for Corporation Tax due for the year ended 31 December 2020. 19 October 2021 – PAYE and NIC deductions

Students are warned of tax scams

University students taking part-time jobs are at increased risk of falling victim to scams, HMRC is warning. Higher numbers of students going to university this

Data easing for the UK?

In a recent press release issued by the Department for Digital, Culture, Media and Sport, with the leading title “Unleashing Data’s Power”, it was announced:

Quick Links

Web + SEO - LoudCrowd