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We are often asked by clients to advise regarding company cars, so I thought it would be helpful to summarise a couple of points for you which have been highlighted in recent Tribunal hearings which have, unfortunately, gone in favour of the Revenue.
It is often thought that if a car is generally available to anyone who needs to drive it, it must be a pool car and therefore not taxable as a benefit in kind on anyone. Sadly, HMRC and the Courts do not agree.
To be exempt, the car must be one which is:
The rules are very strictly applied and, if challenged, you need evidence to prove that they are met.
Car leasing costs
It would be rational and logical to assume that if your company leases a car for your use, and you reimburse the full amount of the leasing cost, you would have no taxable benefit. Rational, logical but not correct.
Recent tax cases have established that the correct tax treatment is that the appropriate car “scale charge” benefit remains in place. This means that even applying the correct treatment for reimbursement, the best you can achieve will be to reduce the taxable benefit pound for pound by the amount reimbursed, although even that reduction should not be taken for granted and is dependent on jumping through some hoops. Worse still, in general, the “scale charge” for a car is nowadays likely to exceed the cost of leasing it, so even if you reimburse the full leasing cost it is likely that you will be left with some residual charge to tax. Illogical as Mr Spock would say, but true.
If you have any questions or queries around these issues, please contact us. Our in-house experts on benefits, would be happy to undertake a more detailed review for you if necessary.
Simmons Gainsford LLP
Posted on 16th Nov 2023
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