Horse lorry - benefit in kind?

Horse lorry - benefit in kind?

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The client is a company with one director. The company manufactures specialist furniture, which is delivered and fitted for customers.  There are 5 employees who do the manufacturing work, whilst the director oversees the company and specifically works on marketing.  The company has bought a lorry with a bespoke body designed so that it can be used for delivering goods, but also used for transporting the director's horses.

How do I deal with the benefit in kind for the director's personal use of the lorry?  Is there an argument for the company to sell the lorry to the director?  Should the director be paying the company for private use?  Is there  a mileage rate for lorries similar to that for cars and small vans?

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By Steve Kesby
18th Mar 2014 11:18

What's its maximum laden weight?

If the maximum laden weight is more than 3½ tonnes, the exemption in ITEPA 2003, s 238 might be in point. See EIM22990 onwards.

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By jmwaa
18th Mar 2014 11:37

Does the DIrector make the deliveries?

It looks to me as if the director would be subject to BIK if he only uses the lorry for his horses and has an employee who makes the deliveries.  The charge would be a proportion of total running costs rather than a fixed charge as for private cars.

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By F1 fan
18th Mar 2014 15:46

Lorry BIK, and capital allowances

Would it be different if the director made the deliveries?  That could be arranged!

Not sure of maximum weight.  I will try to find out.

The lorry chassis was second hand.  Total cost 20,000.  What about capital allowances?  With a sole trader I would apportion capital allowances according to business/private use.  Does the same apply for a company?

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By Steve Kesby
18th Mar 2014 16:01

If the maximum laden weight...

... is more than 3½ tonnes, the exemption only applies if the directors use of it isn't wholly or mainly private use. Therefore they would need to use it more for business than they do privately.

If they fail that they'll get an asset benefit 20% of the market value when first made available to them, plus a proper proportion of the running expenses.

If the maximum laden weight is 3½ tonnes or less, then the van benefit rules would apply and any private use needs to be insignificant in order to not get a £3K benefit charge.

Whatever it is, and regardless of the extent of private use, you can claim capital allowances in full for a company.

If input VAT was recovered on the purchase/conversion, there are also VAT implications of private use.

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