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Is car Benefit in Kind 50% each when joint users?

A couple who are both directors and work equally in a limited company business contract hire a car through the company.

Can the BIK be split 50:50 between them?

They both take remuneration up to the top of the NI Employers' Earnings Threshold, so both have some surplus personal allowances that could be offset against the BIK.

Both drive the car.

If it can be split 50:50, would it make any difference in a slightly different situation where both were directors but one did the majority of the work in the company (i.e. one full time and one part time)?



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Yes and no

The libility to a taxable BIK is triggered by the car being available to the director. In theory you could say that the car is available to both directors all the time except for when it is being driven by one of them so could end up with two lots of almost 100% of the benefit. In practice, though, it would be a very picky inpector of taxes to push that point. In all likelyhood, you'll get agreement that an apportionment is more equitable. Whether that is 50/50 or some other split will depend on the facts.

I would asken for agreement from HMRC on the basis that this split works.

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HMRC Guidance - Just and reasonable

The following is taken from booklet 480

Shared cars:

 12.38 A shared car is one:

• which is available to more than one employee concurrently

• made available by the same employer

• available concurrently for each employee’s private use, and

• for which two or more of those employees are chargeable to tax for that year.

Where these conditions are fulfilled the benefit of the car to each employee is:

• calculated separately under Section 121 (paragraphs 12.4 to 12.37), and

• then reduced on a just and reasonable basis.

However, only availability to those chargeable on the benefit of the car is to be taken into account in making this reduction. Any availability to employees not so chargeable (either because their earnings are insufficient or because they are prohibited from using the car privately and do not do so) is to be disregarded. The total amount chargeable in respect of the car is therefore thesame as if the car had been available to only one employee for private use and there had beenno sharing.




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There are two issues

Where a car is provided to more than one member of a household that are both employees, you need to decide whether the car is available to each of them by reason of their own employments, by applying S.169 ITEPA 2003.

In your first case, the answer is probably yes. And in your "slightly different situation", the answer is probably no, and there will just be a car benefit for the full time working member of the household.

If both are liable to a car benefit S.148 ITEPA 2003 then applies, so that each gets charged a full benefit, which is then reduced on a just and reasonable basis, as has already been mentioned.

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