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Company Car BIK for Non-UK resident

Company Car BIK for Non-UK resident

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Here's the scenario - UK Ltd Co has two directors. Both take a salary and both pay PAYE on that salary. One director based in the UK, the other is tax resident in Spain. The company leases a car for the director in Spain, but where is the BIK paid and how much? Earned income is taxed where it is earned (UK for both directors). Un-earned income is taxed where you are resident (UK for one director, Spain for the other). If the Company Car BIK is considered earned income, then presumably that tax should be paid in the UK, but on what basis (i.e. spanish cars will have no P11D)?

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By The Dullard
09th Jan 2022 16:43

Where does the Spanish director perform the duties of their directorship? That's the basis on which you determine where, and to what extent, the earnings of that directorship are taxable. It sounds like they could have been incorrectly paying PAYE.

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By Rowley Birkin QC
09th Jan 2022 17:05

For the purposes of the question let’s assume the directors duties are fulfilled only in the uk. The question is how the BIK is calculated on a vehicle leased outside the UK

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Replying to Rowley Birkin QC:
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By The Dullard
09th Jan 2022 17:22

It's calculated in the usual way. I think ITEPA 2003, s 123 might be what you seek.

It's reported on a UK P11D for that purpose too.

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By Hugo Fair
09th Jan 2022 17:11

And what do you mean by "(i.e. spanish cars will have no P11D)?"?

If, and that's by no means certain so far, the Spanish director is liable for UK PAYE on the earnings of that directorship then it is likely that other associated BiKs form part of the remuneration package for the same job.

As I said I'm not sure what you mean by a 'spanish car' - but if that is simply shorthand for the provision of the car being in Spain, then I can't see it's relevance. After all, a standard UK director of a UK company (where all business and residence occurs within the UK) cannot selectively choose to receive certain benefits outside the UK in order to avoid liabilities for UK tax.

EDIT: crossed with 17:05 response - but I still don't understand the question. What aspect of calculating the P11D values is affected by location of the vehicle? [The cost of the lease, when taken out by the company not by the director, is irrelevant surely].

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By Rowley Birkin QC
09th Jan 2022 17:18

Not sure why you’re asking about avoidance of taxation.

The “Spanish car” (ie one bought or leased in Spain) will not have a P11D as there is no such thing as a P11D in Spain. So, how is the value calculated for the purposes of BIK in the UK? The UK value of the equivalent UK car? Or the Spanish value of the actual car, divided by the prevailing exchange rate? Further, is there a precedent for such a use-case?

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Replying to Rowley Birkin QC:
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By The Dullard
09th Jan 2022 17:25

Why are you being so rude, when you're the one asking for guidance.

Read the legislation!

*moderated comment

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Replying to The Dullard:
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By Rowley Birkin QC
09th Jan 2022 18:18

Calm down dear, you don’t want to be the one to prove Godwin’s Law

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Replying to Rowley Birkin QC:
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By Hugo Fair
09th Jan 2022 19:08

Whilst it was obvious from your chosen pseudonym that you're stuck in the 1990s - and in a none too salubrious homage - that reference (presumably an intended wind-up) would have been rejected by Paul Whitehouse from any script where he held veto rights.

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Replying to Rowley Birkin QC:
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By Hugo Fair
09th Jan 2022 19:00

To whom is this addressed (your post of 09th Jan 2022 17:18)? And who is "asking about avoidance of taxation"?

As I've already mentioned, the cost of the lease (being borne by the company) has no relevance to the provision (by the company to a director/employee) of a benefit in terms of taxation on the director/employee (for that benefit).

You appear to be stuck on "how is the value calculated for the purposes of BIK in the UK?" ... and the answer is via none of the alternative methods that you've listed, but in the usual way that P11D values for a Car (and maybe Fuel as well?) are in the UK.

If your question is as simple as 'how do you complete a P11D with regard to provision of a car as a BiK to an employee?' ... then the answer can be obtained by:
* either reading the HMRC guidance on that very topic; or
* paying a professional to do that for you.

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By Leywood
09th Jan 2022 17:46

Suggest you get an Accountant. One you pay for.

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By Tax Dragon
09th Jan 2022 20:59

UK tax is determined by UK, not Spanish, law.

Who knew?

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