I will qualify for a company lease car shortly but am a bit confused about tax implications.

I understand that BIK is due at a set rate and is based on my tax rate.

so a £20K car at BIK 14% means I get tax on 14% of the value = 20% tax on £2800 + £560 per year tax - is that right?

BUT with our scheme we pay towards private use and also fuel the car, get the standard mileage allowance back for work miles travelled.

So with 10,000 personal mileage and 10,000 work mileage I could get a family sized diesel for about £130 per month but do I also pay BIK?

Don't worry about the actual amounts just now, just interested in the mechanics.

Check out the hmrc website. There is a calculator you can put all the info in and get the results.

Just been through this myself, but mine was simply company car to use as I want and all fuel paid for. Down Side tax man pulls my pants down each month.

When you say you pay towards private use, is that just for the fuel or a contribution to the running costs of the car?

I would pay a contribution towards private use for lease and running costs. I would also insure the car and put in ALL fuel.

I then get claim back a mileage rate that is designed to reimburse business fuel, incidental costs and a proportion of the insurance.

This is circa 26p for the first so many miles then drops to a lower rate. I believe these rates at HMRC approve and non taxable

Why do you insure it?

Not being then owner has difficulties when insuring, and greatly reduces those that will offer insurance and usually helps ramp prices up.

Been there when I had a personal leased car.

That just the way the scheme works. Maybe another way of proving that there is no private benifit???

My current car is a private lease and I had no difficulty getting it insured and there was no increase in premium. (I initially neglected to tell the insurance that it was a lease car but they said there was no problem so long as the owner was noted. To insure anything you don't need to be the owner, you just need to have an "insurable interest".

Edited 2 March, 201313 yr by slider

Cant say on your scheme but it sounds a bit iffy to me.

My company car is fully funded so I pay tax on the car and tax on the fuel.

Might be worth looking into it a bit further.

I think the scheme is intentionally design so that the driver pays as little tax as possible.

Also as I work in the public sector they are very careful no we days not to be seen to be giving any hidden benifits

Looking at the hmrc tax calculator it looks like I would only pay about £20 a month tax as I would be paying for private use of the car and all private fuel.

£130 a month private use charge and £20 tax can't be bad for a maintained £20000 car.

I think your scheme has potential for a tax bill in the future.

We have two options, fully funded, this is a car for business and private use including all fuel, this is a no brainer but has a high tax cost to the individual, it is beneficial to the individual if a lot of private miles are covered, on a 170 Yeti this option cost about £400 a month to the tax payer (If I didn't have the car and fuel I would take an extra £400 home)

We also have an option for car with business fuel, private miles have to be logged and fuel paid for, this is done by a monthly mileage log being kept for business and personal, all fuel is paid for by the company and then at the end of the month mileage and fuel is added up, the percentage of private miles is used as a percentage of fuel cost and the employee pays that percentage of the fuel for private use.

As for insurance, I didn't think you could insure the same car twice? How would you decide what company to claim off? Also when you have a company car your employer has to pay higher NI contributions for you having the car.

To get a true figure of cost to you, got http://www.comcar.com on there you can add the car, the fuel or not and the make and model of the car this will show you how much it will cost you.

One thing I do know, if you get it wrong or your company get it wrong the tax office just get there money anyway, you will be told ignorance is not an excuse. Make sure what you are doing is correct, if in doubt call the tax office as they have always been very good when I have called them.

All I can say is that this scheme has been available to my employers for many years (I only joined 15 moths ago). Currently about 200 cars supplied on the scheme in Scotland. The same Scheme operates in our sister divisions in England and Wales, so lots more motors there We are public sector and a division of Government. I may be wrong but I expect the same operate through out the civil service.

Cars are not insure twice - they are insured by the employee only. The business mileage rate we are paid includes an element to reimburse part on the insurance costs and is HMRC approved.

Edited 3 March, 201313 yr by slider

To get a true figure of cost to you, got http://www.comcar.com on there you can add the car, the fuel or not and the make and model of the car this will show you how much it will cost you.

the link takes me to a website about commercial vehicles??

on the HMRC calculator site a £20000 diesel car with 99g CO2 and £130 per month employee contributions (no fuel by employer) would cost a 20% taxpayer £248 per year in tax.

Edited 3 March, 201313 yr by slider

Looking at the hmrc tax calculator it looks like I would only pay about £20 a month tax as I would be paying for private use of the car and all private fuel.

£130 a month private use charge and £20 tax can't be bad for a maintained £20000 car.

And how much if fully taxed? Sounds more expensive than simply getting BIK.

I pay around that for a RRP £30k car + private fuel via hmrc per mile rates.

All I can say is that this scheme has been available to my employers for many years (I only joined 15 moths ago). Currently about 200 cars supplied on the scheme in Scotland. The same Scheme operates in our sister divisions in England and Wales, so lots more motors there We are public sector and a division of Government. I may be wrong but I expect the same operate through out the civil service.

Cars are not insure twice - they are insured by the employee only. The business mileage rate we are paid includes an element to reimburse part on the insurance costs and is HMRC approved.

So who insures for business use?

If your role has almost zero business use need, then it sounds simply like a collective car buying /renting scheme falsely being labeled as a company car scheme to make you think you're getting something you're not.

Apologies, try http://www.comcar.co.uk

I really can't see how you can avoid tax, even if you contribute towards private miles you still have a car provided by work, therefore it is a benefit in kind and will/should be on your P11D.

So who insures for business use?

If your role has almost zero business use need, then it sounds simply like a collective car buying /renting scheme falsely being labeled as a company car scheme to make you think you're getting something you're not.

The employees must ensure the insurance covers business use. I would not be entitle to a lease car if I did not do reasonable mileage.The car would do about 2/3rd of its mileage as business miles (about 10K private 18-12K business) . I would reclaim business mileage at an HMRC approved rate which includes an element to reimburse the insurance (think this is 26.5p for the first 10K the reduces as the insurance element is deemed to have been covered).

Apologies, try http://www.comcar.co.uk

I really can't see how you can avoid tax, even if you contribute towards private miles you still have a car provided by work, therefore it is a benefit in kind and will/should be on your P11D.

But as I am paying a monthly contribution for private use the BIK is much reduce.

Using a basic 5 door gold as and example the calculator put the annual tax bill of a £2.5K diesel car at £260 if I pay £130 an month personal contribution. therefore cost to me for a fully maintained car is £130 + (£260/12) = £151.60