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Benefit - car rules or provision of asset rules

Employer leases cars to hire out to customers. they are leasing an extra car for an employee's use

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If required this car made available to an employee can also be utilised for customer/business rental (which is the nature of the trade) if they run short of vehicles to hire out.  So since it is the employer's business model to lease cars rather than buy them and it is not solely for the employee's use should I use the cost to the employer of leasing that particular car or the car's market value when new to work out the taxable benefit?

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By paul.benny
02nd Jul 2021 13:30

It's almost certainly car benefit rules. But I think you have to delve more deeply into the employee's use. If the car isn't solely for employee's use, when and how is it made available for driver? Remember, the test for car benefit is 'made available' and not the actual usage.

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Replying to paul.benny:
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By Hugo Fair
02nd Jul 2021 14:24

"Remember, the test for car benefit is 'made available' and not the actual usage."
Quite, and the test doesn't recognise part-days.

So, employee drives into work (car was certainly available at that point) ... but is met with news that car is being provided to a customer with immediate effect (so get yourself home by any other means - presumably at your cost).
Employee now paying BiK for whole day as well as train/taxi/whatever cost of getting home on same day!

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Replying to Hugo Fair:
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By Kathlyn French
02nd Jul 2021 16:33

The situation is exactly as you describe. The employee does not have exclusive use of the car because it can be taken back for use by a customer thus creating more turnover (and potential profit) for the employer. It is therefore only discretionary availability. The difference between the leasing cost and the 'standard' car benefit charge is very great so it seems inequitable- hence my query .

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Replying to Kathlyn French:
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By Hugo Fair
02nd Jul 2021 17:03

Inequitable, undoubtedly, but that has never been a basis for determining tax treatment.

On the facts presented so far, provision of the car would be a BiK on every day for which it had been 'available' (Paul's point) for any amount of time (my point).
There are a multitude of missing factors that may be relevant (e.g. who pays for insurance and maintenance, whose name is in the logbook and so on) ... but it appears that it is only being made available to the employee as part of her/his remuneration package (i.e. because they are an employee), so by default is a BiK.

Whether or not the employee feels this is a worthwhile 'deal' will depend on her/his expectation of how often the car will be available and their attitude to risk. Personally I wouldn't be happy having a car that can be withdrawn without notice the day before my planned 2-week driving holiday around Scotland, but if it was the only way I could afford a car and I believed (hoped) that withdrawal would be a rare occurrence ... then I might take a chance.

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Replying to Hugo Fair:
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By Kathlyn French
03rd Jul 2021 17:00

In 'real life' this is the bottom line in this issue. The employee on the face of it is not getting a very good deal because the leasing cost to the employer is much less than the market value when new and therefore the employee's taxable BIK. Renegotiating his remuneration package would seem to be the way to go for the future. Thanks for all your thoughts and comments.

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By Paul Crowley
02nd Jul 2021 13:52

Assumed the employee is not one of the directors

The phrasing is odd

'If required'

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Replying to Paul Crowley:
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By Kathlyn French
02nd Jul 2021 16:35

No, he's not a director. "If required" is hopefully adequately explained by the other comments in this discussion. Thanks

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By Mr_awol
02nd Jul 2021 17:53

This is no different to a car salesman who will have various demonstrators as their company cars but if someone wants a 24hr test drive their car is used.

The only difference is in the OP you have an e’ee with the same car all the time rather than swapping demos around.

As such I’d say company car but there may be a small number of days/periods where the car was unavailable.

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Replying to Mr_awol:
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By Kathlyn French
03rd Jul 2021 17:03

Thanks. That's very useful to have another job comparison. Your comments are appreciated.

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By Bobbo
05th Jul 2021 09:57

The other difference from your situation and the car salesman scenario is that the salesman would probably be given another car to drive whilst 'their' car was being used for a test drive and so there would be no period of unavailability.

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By Tax Dragon
05th Jul 2021 10:31

The asset is a car. Whether it's bought or leased, employee has the use of it.

Given your response to Awol, you might like some comments in this thread - the final comment also includes a useful link. https://www.accountingweb.co.uk/any-answers/camper-van-rental-business-l...

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