An individual retired and took a part time job, three days per week. The company provided him with a car. They told him it was a pool car. (it wasn't) and said that he would not be taxed on it.
He then realised that it was not a pool car and would infact be taxed, so he gave it back for the rest of the time. He actually took public transport to the office on day one, and on day three handed the car keys to be parked at their premises. He returned again by public transport.
I cannot see anything in the leg to say that he would be only taxable for three days, apart from him being not taxed when it was not available for part of the year. However, the car was not available to him for the four days because he handed the keys in, so logic would suggest that he would only be taxed on 3/7ths of the car benefit. Naturally, he has not kept detailed records of when he had it, but it may be available from time sheets.
Would I be correct in thinking that he would only be taxed on 3/7ths of this?
The other thing is, the P11D does not allow this to be shown. I can only assume therefore that a new P11D would have to be completed for each 3 day period?
The guy came via TOP, so consequently is of limited means, and every penny counts for him!
Replies (8)
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Unavailable
Car benefit would be chargeable on the whole year but as you quite rightly state there would be an unavailable period equivalent to 4/7ths over the period in question.
If the employee was able to travel in on public transport and willing to do so it may have been an idea for him to travel in to work everyday on that method and take the car from and return it to the office before travelling home on public transport. Then no benefit charge would have arisen.
It's not that simple
The problem is that the car would still be available to him under the terms of his initial contract.
The employee could have requested the return of the keys at anytime. The restriction is one that he imposed on himself, not his employer.
Were any records kept of the return of the keys?
Interesting point about whether or not it is "available" to him on the four days he leaves it at the employers' premises. It doesn't sound as though he does so at his employer's insistence. What would the employer say if he took it home on days when he was not working?
Assuming you can overcome that it must be right that he is only taxable on 3/7 of the full year's benefit.
I agree that there is no obvious way of capturing that on the standard P11D form, but hope that it can't be right that you have to do a separate form for eahc 3 day period. However, if you are actign for the individual not his employer that is not your problem.
I thought
Interesting point about whether or not it is "available" to him on the four days he leaves it at the employers' premises. It doesn't sound as though he does so at his employer's insistence. What would the employer say if he took it home on days when he was not working?
Assuming you can overcome that it must be right that he is only taxable on 3/7 of the full year's benefit.
I agree that there is no obvious way of capturing that on the standard P11D form, but hope that it can't be right that you have to do a separate form for eahc 3 day period. However, if you are actign for the individual not his employer that is not your problem.
I thought it was that the car had to be unavailiable for at least 30 days before it counted, so 3 days on 4 days off will be the same as 7 days on. Booklet 480 Chapter 12 seems to back this up.
On that basis, his benefit is for the full year, even if he had it in his contract that he had to hand the keys in every Thursday evening till Tuesday morning.
Good point
thought it was that the car had to be unavailiable for at least 30 days before it counted, so 3 days on 4 days off will be the same as 7 days on. Booklet 480 Chapter 12 seems to back this up.On that basis, his benefit is for the full year, even if he had it in his contract that he had to hand the keys in every Thursday evening till Tuesday morning.
Would each 4 day week be treated as a separate period of unavailability? This would seem hugely unfair (not that taxes have to be Re: Lobler) although the word "consecutive" certainly seems to suggest it.
At least 30 days
Yes, Constantly Confused is correct. An adjustment can only be made if the car is unavailable for a period of 30 consecutive days (or for periods before the car is first made available in the tax year or after it is last made available in the tax year).
This is the effect of the wording in s. 121 and s. 143 of ITEPA 2003.
Sadly, therefore, the efforts made to reduce the benefit in this case simply do not achieve the desired tax outcome. He is still taxable on the full benefit. Hopefully the employer was not paying for fuel other than for any business journeys ... .
If he was told that he would not pay tax on the benefit, he may presumably look to his employer to pick up the tax bill.
Ray
Unless it is a shared car
Agreed re the 30 consecutive day de minimis rule, but does not apply if someone else uses the car on the other three days per week.
Way round that of course is for him to be allowwed to use the car for 22 weeks a year (7 days a week) and not be allowed to use in in the other 32!