P11d BIK re wife's car
I am in the process of preparing P11ds for an owner managed IT consultancy Ltd company. This is a one man band operation and as is typical, the owner generates the income and the wife does a small amount of secretarial admin work. In 2008/9, he paid her a small salary as remuneration but in 2009/10 decided to provide her with a company car with fuel instead of salary. The BIK value of this is circa is £6,800. Does he/she have a P11d BIK issue here, I can't help thinking that there must be one.
Thanks for any help and direction provided.
Directors household
A BIK must be reported on a P11D if benefits are reported to any members of a director's household (spouses, partners, children, maybe even domestic servants) even if total remuneration including the BIK is less than £8,500. To that extent, they are treated the same as directors themselves for BIKs. Don't think the benefit would be assessed on the director himself though even if the wife doesn't use the car for her small admin duties. There is nothing to stop you paying your wife more than the going rate for the work she does and this can be in the form of benefits as well as salary. However, there might well be a problem claiming it as a deduction against corporation tax as it can hardly be described as a necessary trading expense. Sounds an expensive way of paying your wife. Better I'd have thought to just give her shares and pay her dividend. Or maybe pay her rent for a home office if they both co-own the house.
Chris F
Quite possibly
HMRC may well argue that the BIK should be taxed on the director not his wife on the grounds that the company is providing this remuneration package to her only because of her husband's role (i.e. they would not employ someone unrelated for the same role on the same package).
Who actually uses the car?.....