I am pretty sure the answer is no but the question was raised to me so thought i would clarify it.
One of our employees is given a company car in which there is a benefit in kind on.
I understand the benefit in kind covers the cost of the car, repairs, insurance, servicing, road tax etc (but not fuel obviously)
The employee pays his own insurance on the company car and we do not insure the car in any way.
Due to this the employee has asked if he can claim the insurance payments as payments towards the running cost of the vehicle on his P11d.
As i said i am thinking no but any clarification on this would really help, cant find any guidance either way on this.
Thanks.
Replies (7)
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No / Maybe
As I see it, there are two possibilities for claiming the insurance as a deduction against the car benefit:
As a “Capital contribution by the employee” (section 132 ITEPA 2003).
As a “Deduction for payments for private use” (section 144 ITEPA 2003).
I do not believe that it could be argued that the payment is a capital contribution, so that can be ruled out.
Similarly, the payment made under the arrangements described is not a payment for private use; it is clearly a payment made to insure the vehicle.
So the answer to your question is that no deduction can be claimed (by you as the employer) on the P11D.
Having said all of that, with a bit of legal jiggery pokery you can restructure things so that the payment of insurance (or any other expense) can be claimed as a deduction in the future: the company will need to pay the insurance direct, and the company will need to document the fact that the employee is required to make a corresponding payment to the company in order to use the car privately.
This comes with HMRC’s blessing, via EIM25255:
http://www.hmrc.gov.uk/manuals/eimanual/EIM25255.htm
Hope this helps.
Worried
To have valid insurance over an asset you must have an insurable interest. So I don't see how the employee can have valid cover on the car that belongs to or is leased by the company.
Are you sure
who the legal owner is (the insurance company)
Insurance company owning cars?
Bearing in mind that driving a car without valid insurance is a criminal offence, I don't think I'd dismiss this casually.
worried too
or he's driving a company car third party which is also a bit worrying if he trashes it. Hope he has business use on the insurance!
There has to be an insurable interest
Any Insurance company worth its salt will happily take money, it's only when a claim is made that they would point out the error made by "the customer".
If your company owns the car then it's imperitive that they ensure the car is insured. Should your employee be at fault and the compensation runs into £000s (possible) then the company is exposed to the liability with no insurance to back it up.
Even if, in the event that the car is damaged at someone elses' fault and a claim were to be sucessful any payment would go to the employee and not the company.
I suggest that you tidy up this mess asap.