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Company Cars / Vans

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We have a selection of company cars and vans which employees have been given.

The employee needs to complete a declaration form to declare if they are going to use the vehicle for private use or not. If they do declare then they are deducted private mileage each month at the advisory rate.

Some declare they do not use for private use, some of these include cars.

A couple with cars say they don't use them for private use and therefore do not submit any private mileage.

Most staff are field based so rarely come to the office.

Is the above acceptable as a general policy or could HMRC dig holes in this?

Replies (16)

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By rmillaree
19th Oct 2021 09:17

If you are primarily looking to avoid p11d benefits being levied for ALL cars with your company then your approach simply does not cut the mustard with hmrc as far as i can see if employees have cars stored at home - there are plenty of other reaons why yournot so clever plan would fail too unfortunately

Here is the link below ref the stringent rules that must be met if car is to avoid being treated as p11d benefit - it must pass ALL the pool car rules. HMRC will look at all car arrangements with deep suspecicion so facts do matter here as well as having correct written procedues for pool cars!

Note cars cannot be stored at home (normally) and should just normally be used by one person. Note travel to and from permanent worplace is classed as private use.

https://www.gov.uk/guidance/use-of-company-pooled-cars-or-vans-480-chapt...

Unless its electric or low list price or some hybrid vehicles - its likely to be very tax inefficient providing cars for employees that are subject to p11d charge - expensive for them if they are taxed on more than cash cost and expensive for you if you are paying class1A at nearly 14%. If you are going down that route at least take care with car choices as two similar cars can have vastly different benefit charge rates !

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RLI
By lionofludesch
19th Oct 2021 09:32

If I were to condense the above into a sentence, I'd say your vans are grand but your cars are a disaster.

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Replying to lionofludesch:
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By accountaholic
19th Oct 2021 13:09

That gave me a laugh over my sandwich!

You should hire your services to Office for Tax Simplification.

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By paul.benny
19th Oct 2021 09:45

Actual private mileage is only relevant if you are providing fuel (eg a fuel card where employee reimburses fuel used for private mileage).

If you're doing that, it's risky relying on self-declaration of private mileage as most will guess/forget/otherwise underestimate. I would advise a full mileage log (all journeys) where employees identify whether journey is business or private.

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By Paul Crowley
19th Oct 2021 10:00

No
All cars are AVAILABLE for private use
All cars should be on p11ds
Car benefit and Fuel benefit as just one miles worth of free fuel is enough to trigger the benefit
Get the P46 Car forms sorted soonest. You are probably already late with this

Talk to your accountant as a matter of priority to figure out how to sort this problem moving forward

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By Duggimon
19th Oct 2021 10:01

I'm not sure what the question is here, is it purely regarding whether the method of calculating private mileage is satisfactory? If so for what purpose?

Are you just seeking to avoid paying the fuel benefit on top of the vehicle benefit? Or are you seeking to avoid paying any benefit in kind where the vehicle is not used privately?

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By DAVY67
19th Oct 2021 10:04

Thanks for the replies.

Just to clarify, am not looking to avoid P11D benefits, I've recently taken over and want to ensure everything is tight and compliant.

The cars were my main concern, some staff state they do not use for private mileage and don't submit any private mileage.
All staff with vehicles are provided with fuel cards.

P46's are up to date it is the private mileage which is in question.

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Replying to DAVY67:
RLI
By lionofludesch
19th Oct 2021 10:09

DAVY67 wrote:

Thanks for the replies.

Just to clarify, am not looking to avoid P11D benefits, I've recently taken over and want to ensure everything is tight and compliant.

The cars were my main concern, some staff state they do not use for private mileage and don't submit any private mileage.
All staff with vehicles are provided with fuel cards.

P46's are up to date it is the private mileage which is in question.

So we're talking about the fuel benefit and not the benefit for the car itself ?

Just to be clear.

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By Paul Crowley
19th Oct 2021 10:16

Based on your prior posting you and company need someone who understands how benefits work.

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By DAVY67
19th Oct 2021 10:19

Yes correct. How the fuel benefit is being treated.

I feel the recording of the mileage could be better, if all business mileage was detailed out then the rest could just be put down as private?

In terms of the cars, some state they do not use for private and therefore do not submit any private mileage claims. Just how watertight this is..

I just want to get things watertight and compliant, not looking for any shortcuts.

At other companies we used the fuel scale charge which got rid of all the above.

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Replying to DAVY67:
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By Paul Crowley
19th Oct 2021 10:49

Fuel scale charge relates to VAT
Once again one private mile brings in the scale charge

https://www.gov.uk/fuel-scale-charge

I most certainly would not ever believe any employee that stated that they never once did a private mile in the tax year

I think you will have an interesting time if any of this gets challenged by HMRC

You have staff accepting the P11d Car benefit that never use the car for any private use ever.
How credible does that sound to you?

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By lesley.barnes
19th Oct 2021 11:30

When you posted in July you were going to put detailed mileage logs into place. You seem to have the same problem - not knowing if the employees are being honest with the mileage. Another post talks about a Director/main shareholders and problems with claiming for a private repair to a car. I appreciate that you are an employee but there seems to be a culture of lax or no record keeping.
If the employees can't be trusted to record their business and personal mileage and pay the appropriate tax would fitting trackers be appropriate? That way you can see the mileage and you know the mileage for the jobs. If I were in your shoes I would be making recommedations to your manager in writing and keeping a copy otherwise when HMRC come to visit it might fall on your head.
It doesn't seem credible to me that someone would pay tax for a company car (if I'm reading between the lines correctly) and all company cars are on a P11d but some of these are never used privately.

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By accountaholic
19th Oct 2021 13:21

I think you're attacking the wrong side of the equation by trying to prove or disprove the private mileage.
Turn it round and try to prove the business mileage. If the employees can give detailed business mileage records covering all the miles travelled.(subject to whatever sanity checking or other verification you can think of), then no private mileage.
It's all the same thing really but sometimes looking another way clarifies one's thoughts.

As for vans, the tax rules and exceptions are as woolly as a sheep - mattresses to the tip, dropping the kids off etc.

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Replying to accountaholic:
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By Hugo Fair
19th Oct 2021 16:20

"I think you're attacking the wrong side of the equation by trying to prove or disprove the private mileage" ... exactly!

If your concern is HMRC (let alone business records/costs) then the logic flow is:

1. Assume that staff have not discovered how to control/disconnect the odometer - so you can have the total mileage driven (for any purpose), as long as noting that figure (which should be subject to inspection) is made a mandatory condition of car/van provision.

2. Require drivers to provide a weekly (or monthly) log of every business journey for which car/van has been driven - in which they declare the mileage of each journey (which again is subject to verification).

3. Sum the total business mileage from point 2 for the month, and subtract it from the odometer end-of-month reading.
If the result is greater than zero (even 1) then there has been private mileage, which will affect the BiK of vehicle provision.
And whatever the value (if greater than zero) you have the amount of private mileage for any fuel calculations you need to make.

It may sound cumbersome, but is actually extremely simple to operate - and what most companies do in your position.

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By [email protected]
21st Oct 2021 14:54

As others have pointed out Car benefit and Fuel Benefit are based on availability
The mere fact that the vehicles (the above does apply to vans just at fixed and generally more beneficial rates) are kept at home. (more specifically NOT kept at company premesis) means they are subject to charge.

HMRC will generally not accept a declaration of private mileage and car benefits is one of the 1st things they look at when carrying out an inspection.

To avoid the fuel charge detailed mileage records are requred with a deduction of the fuel cost for private mileage.
Home to work travel is classed as private. As is home to 1st appointment for mobile workers.

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By Tax Dragon
21st Oct 2021 17:27

Have a read of EIM22905 and EIM22910 - and actually go backwards and forwards a few pages from those. (Car fuel benefit itself starts at EIM25500, but you'll want to save the best till last, so don't jump straight into that part of the manual.)

You have inherited a highly unsatisfactory system. Good luck sorting it out (and I agree with accountaholic's "wrong side" comment - and Hugo's endorsement of that comment).

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