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Transfer of Company car to Individual

Transfer of Company car to Individual

Any tax issues arising if a company vehicle worth aprox £16k with about £15k left on HP is transferred to the director.

The director will have the HP agreement transferred to his own name and pay for all the repayments and running costs himself.

Are there any hidden problems with this arrangement.?

many thanks
david

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17th Jul 2002 17:50

...and
Ms Fidler

Once the car leaves company ownership both car and fuel benefit cease. We are saying the same thing. I was widening the discussion into a hypothetical situation and inadvertently caused a wrong impression whilst trying to clarify. Now that I read my post again I can quite see the ambiguity that exercised your grey cells. My desire to be succinct has wasted your time. My apologies.

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17th Jul 2002 12:06

A couple of points spring to mind....
Individual

Possible assessable benefit, i.e. transfer of asset at under value (I believe the HP balance would be treated as the directors contribution to the vehicle).

You should be aware that although the car benefit will be pro rata, the fuel benefit will not, so if he has had any private fuel in the year he pays the full amount.

Company

Class 1A on benefits mentioned above.

Depending on the tax written down value of the the expensive car there will be a balancing charge/allowance in the capital allowance computation.

This is not exhaustive, as will be demonstrated.

Regards

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17th Jul 2002 14:10

One point of disagreement

What cannot be done is to cease the fuel benefit part way through the year and attempt to reduce the P11D reportable sum. If the car ceases to be provided altogether then you CAN pro-rate the fuel benefit.

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By lfidler
17th Jul 2002 14:37

Company ceases to provide the car?
Isn't the employer ceasing to provide the car if the HP agreement is being transferred to the individual - so the fuel benefit SHOULD be pro-rated? It doesn't matter that he happens to be driving the same car - it's how it's made available that matters. (From 6 April 2003, when free fuel is withdrawn partway through the year, but the car remains available from the employer, then the fuel benefit will be apportionable).

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