Van - P11D - Benefit In Kind?


P

Pete Heslop

Hi all,

I'm one of two Directors running a small engineering products distribution
company (we are the only two employees)

The other Director is paid for using his own vehicle for company business on
the 40p/mile rule and will return no more than 600 miles/month (7000ish
miles per year).

I myself use the company diesel van *purely* to get me to and from home to
our unit (in actual fact it's moreover due to the fact that the only place
to leave it overnight is not too safe) - the van is absolutely not used by
myself when I bring it home of an evening & weekend. I live around 8 miles
from work.

Would someone be kind enough to advise me of any Tax and/or NI liabilities
on the above two arrangements?

Thanks
 
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M

Martin

Pete Heslop said:
Hi all,

I'm one of two Directors running a small engineering products distribution
company (we are the only two employees)

The other Director is paid for using his own vehicle for company business
on
the 40p/mile rule and will return no more than 600 miles/month (7000ish
miles per year).

I myself use the company diesel van *purely* to get me to and from home to
our unit (in actual fact it's moreover due to the fact that the only place
to leave it overnight is not too safe) - the van is absolutely not used by
myself when I bring it home of an evening & weekend. I live around 8 miles
from work.

Would someone be kind enough to advise me of any Tax and/or NI liabilities
on the above two arrangements?
I think this is how it works - others may correct me...

"The other Director"
===============
No tax / NI liability on "The other Director", and Company can claim the
full 40p against taxable profits. Just check the mileage claimed is all
business (i.e. no home to normal place of work). If your Company is VAT
registered, you can recover the VAT (7/47ths) of the fuel element within the
40p. (Check HMRC web site for fuel element - it depends on engine size
etc.) Obviously, if you recover the VAT, then only the balance can be set
against profits for CT.

"I myself"
=======
You, personally, have a taxable benefit of £500 (assuming you're talking
2004/05) - so declare this on your SATR, in line with what your P11D will
say when you give it to yourself! (I assume van < 4 years old, otherwise
benefit = £350) You'll pay tax on this benefit (at your marginal rate) but
not NI.

Company has to pay class 1A NIC on the benefit. Unfortunately, the fact you
don't use it privately makes no difference. The "test" is that it is
available to you, whether you use it privately or not :-(

This is pretty non-contentious, so a call to HMRC may be helpful.
Otherwise, dig around the HMRC site, especially CWG2 and CWG5.
 
S

Simon

Pete Heslop said:
Hi all,

I'm one of two Directors running a small engineering products distribution
company (we are the only two employees)

The other Director is paid for using his own vehicle for company business
on
the 40p/mile rule and will return no more than 600 miles/month (7000ish
miles per year).

I myself use the company diesel van *purely* to get me to and from home to
our unit (in actual fact it's moreover due to the fact that the only place
to leave it overnight is not too safe) - the van is absolutely not used by
myself when I bring it home of an evening & weekend. I live around 8 miles
from work.

Would someone be kind enough to advise me of any Tax and/or NI liabilities
on the above two arrangements?

Thanks

At the moment, there is a scale charge depending upon the age of the Van. If
it is under 4 years old, the charge is £500, but if over, then the charge is
reduced to £350.

Next Year, this is different in that the charge will rise to £3000 plus a
fuel charge if private use is allowed. However, if the private use is
limited to ordinary commuting and legitimate buisiness use, then no benefit
will arise.
 
R

Ronald Raygun

Martin said:
Unfortunately, the fact you
don't use it privately makes no difference. The "test" is that it is
available to you, whether you use it privately or not :-(
I don't think you can take it as read that the van *is* "available for
private use". Although the OP indicated that he in fact uses it for
commuting (which would normally be a clear case of private use), this
private use seems to arise as an incidental side effect of transporting
the van to a secure site for overnight parking. This is purely a business
purpose, even though the secure site just happens to be where he lives.
Accordingly it could be argued that the van is in fact not available for
private use.

Availability is not just a question of physical opportunity (i.e. it's
there, he has the keys, so he *could* use it), but of that opportunity,
if taken, being taken legitimately (i.e. with his employer's permission).
The fact that he's a director and so could conceivably give himself the
requisite permission does not automatically resolve the question of
availability. As a director he would (or should, notwithstanding that he's
asking here for clarification) be aware of the tax consequences, both for
him and the company, of giving himself said permission, and he would
therefore think twice before giving it.

Of course, if he's already given it, then all is lost. :-(
 
P

Peter Saxton

I don't think you can take it as read that the van *is* "available for
private use". Although the OP indicated that he in fact uses it for
commuting (which would normally be a clear case of private use), this
private use seems to arise as an incidental side effect of transporting
the van to a secure site for overnight parking. This is purely a business
purpose, even though the secure site just happens to be where he lives.
Accordingly it could be argued that the van is in fact not available for
private use.

Availability is not just a question of physical opportunity (i.e. it's
there, he has the keys, so he *could* use it), but of that opportunity,
if taken, being taken legitimately (i.e. with his employer's permission).
The fact that he's a director and so could conceivably give himself the
requisite permission does not automatically resolve the question of
availability. As a director he would (or should, notwithstanding that he's
asking here for clarification) be aware of the tax consequences, both for
him and the company, of giving himself said permission, and he would
therefore think twice before giving it.

Of course, if he's already given it, then all is lost. :-(
If he takes it from work to home and back that is defined as private
use whether incidental or not - Expenses and benefits booklet
480(2005) 14.3
 
R

Ronald Raygun

Peter said:
If he takes it from work to home and back that is defined as private
use whether incidental or not - Expenses and benefits booklet
480(2005) 14.3
Ugh. It's hard life. Bad luck.
 
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P

Pete Heslop

4 separate replies - thanks guys!!

It must be appreciated from my standpoint that I'd be *most* unhappy to have
a tax liability placed upon me for this so called 'benefit'. The very fact
that I have to park a white van on my drive is an absolute nuisance in its
own right.

I'm inclined to adopt Ronald's thoughts on this situation in that it's
necessity rather than desire which makes me bring the vehicle home to a safe
place.

If I simply withhold this information from my P11D and make out the van is
indeed left at the unit, what is the likelihood of being caught? A bit
dishonest I know, but I'm buggered if I'm paying yet more tax for something
I consider a hindrance!!

Look forward to your view on this.....
 
P

Pete Heslop

Next Year, this is different in that the charge will rise to £3000 plus a
fuel charge if private use is allowed. However, if the private use is
limited to ordinary commuting and legitimate buisiness use, then no benefit
will arise.
Just to pick up on this point Simon, do you mean no 'total' benefit will
arise or just the element of the fuel used?
 
S

Simon

Pete Heslop said:
4 separate replies - thanks guys!!

It must be appreciated from my standpoint that I'd be *most* unhappy to
have
a tax liability placed upon me for this so called 'benefit'. The very fact
that I have to park a white van on my drive is an absolute nuisance in its
own right.

I'm inclined to adopt Ronald's thoughts on this situation in that it's
necessity rather than desire which makes me bring the vehicle home to a
safe
place.
Argument tried many times and it does not work, sorry.
If I simply withhold this information from my P11D and make out the van is
indeed left at the unit, what is the likelihood of being caught? A bit
dishonest I know, but I'm buggered if I'm paying yet more tax for
something
I consider a hindrance!!

Look forward to your view on this.....

Tut Tut, I cant believe you would risk falling foul of HMRC over a van. £500
equates to £200 tax if you are higher rate for you to pay and about £60
class 1A NIC for the company to pay. How much would it cost to commute using
your own car? 16 miles a day at 40p per day plus the inconvenience of having
to replace the van periodically because it gets nicked or vandalised (that
includes by Parking attendants).

Is it worth it.
 
S

Simon

Pete Heslop said:
Just to pick up on this point Simon, do you mean no 'total' benefit will
arise or just the element of the fuel used?

Benefit will be £3000 on the van and another £500 on the fuel, if provided.
A much more realistic benefit but relief for most workers who really do have
to take the van home and private use is not permitted.
 
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P

Pete Heslop

Sorry Simon, but I must be misunderstanding you on this one...

I read this that as from next year (2006/7?) the actual loss of tax free
allowance will be £3000 and a further loss of £500 if fuel is provided,
yeah? If this is the case how can this be a benefit when one would have more
tax liability?

I'm intrigued - most likely misunderstood your reply.

Pete
 
T

Troy Steadman

Sorry Simon, but I must be misunderstanding you on this one...

I read this that as from next year (2006/7?) the actual loss of tax free
allowance will be £3000 and a further loss of £500 if fuel is provided,
yeah? If this is the case how can this be a benefit when one would have more
tax liability?

I'm intrigued - most likely misunderstood your reply.

Pete
Because...
<snip>

Here's a link to your current situation:

"An ordinary commuting journey counts as private use. This is so even if
the employee is obliged to take the van home"

http://www.hmrc.gov.uk/manuals/senew/SE22062.htm


--
 
M

Martin

TOP POSTING MOVED :)
Sorry Simon, but I must be misunderstanding you on this one...

I read this that as from next year (2006/7?) the actual loss of tax free
allowance will be £3000 and a further loss of £500 if fuel is provided,
yeah? If this is the case how can this be a benefit when one would have
more
tax liability?

I'm intrigued - most likely misunderstood your reply.

Pete
Clarity isn't helped by the transition from old to new rules... this may
help...
http://www.hmrc.gov.uk/manuals/eimanual/EIM22705.htm
 
R

Richard White

Pete Heslop said:
4 separate replies - thanks guys!!

It must be appreciated from my standpoint that I'd be *most* unhappy to have
a tax liability placed upon me for this so called 'benefit'. The very fact
that I have to park a white van on my drive is an absolute nuisance in its
own right.

I'm inclined to adopt Ronald's thoughts on this situation in that it's
necessity rather than desire which makes me bring the vehicle home to a safe
place.

If I simply withhold this information from my P11D and make out the van is
indeed left at the unit, what is the likelihood of being caught? A bit
dishonest I know, but I'm buggered if I'm paying yet more tax for something
I consider a hindrance!!

Look forward to your view on this.....
Try finding a friendly neighbour or someone very near to where you live where you can park the van
overnight. Then all you're doing is driving the vehicle to and from its overnight parking space,
and not taking it home.

This would keep the matter off the P11D altogether. Your friendly neighbour could charge for
providing this space, though I doubt they'd charge £3,500/year !!!! You could even sweeten the
bill by letting them park where your van is parked now.
 
S

Simon

Pete Heslop said:
Sorry Simon, but I must be misunderstanding you on this one...

I read this that as from next year (2006/7?) the actual loss of tax free
allowance will be £3000 and a further loss of £500 if fuel is provided,
yeah? If this is the case how can this be a benefit when one would have
more
tax liability?

I'm intrigued - most likely misunderstood your reply.

Pete
Must be so Pete, this is the last year that a van is taxed on a benefit of
£500 for the private use of the vehicle. From next year, the benefit for the
van is being increased to £3000 and a further charge of £500 will be added
if fuel is provided as well.

I think you may be missinterpreting the would benefit. It is not a benefit
to pay more tax, you pay tax on the value of the benefit received by the
employee.
 
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M

Martin

Simon said:
Must be so Pete, this is the last year that a van is taxed on a benefit of
£500 for the private use of the vehicle. From next year, the benefit for
the van is being increased to £3000 and a further charge of £500 will be
added if fuel is provided as well.

I think you may be missinterpreting the would benefit. It is not a benefit
to pay more tax, you pay tax on the value of the benefit received by the
employee.
But in the OP's case, provided the "restricted private use condition" is met
(which seems likely, assuming he actually does use the van for business
during the day) there will be no "private use", hence no tax wef 6.3.05.
 
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S

Simon

Martin said:
But in the OP's case, provided the "restricted private use condition" is
met (which seems likely, assuming he actually does use the van for
business during the day) there will be no "private use", hence no tax wef
6.3.05.

--
Thats right, and he does not have to come up with any spurious excuses to
take the van home.
 

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