When is a Van not a Van? when its a VW Transporter Kombi! Reply

It makes a big difference whether a vehicle is treated as a Car or a Van for tax purposes, in summary:

  1. Benefit in Kind on Cars is linked to CO2 where as on a Van its Flat Rate (and could be zero if your private use is insignificant)
  2. Vans qualify for the Annual Investment Allowance, Cars have restricted Capital Allowances
  3. You can reclaim VAT on Vans but its much harder to reclaim VAT on cars

HMRC have some guidance in EIM23150….

Under this measure, a double cab pick-up that has a payload of 1 tonne (1,000kg) or more is accepted as a van for benefits purposes. Payload means gross vehicle weight (or design weight) less unoccupied kerb weight (care is needed when looking at manufacturers’ brochures as they sometimes define payload differently).

Under a separate agreement between Customs and the Society of Motor Manufacturers and Traders (SMMT), a hard top consisting of metal, fibre glass or similar material, with or without windows, is accorded a generic weight of 45kg. Therefore the addition of a hard top to a double cab pick-up with an ex-works payload of 1,010 kg will convert the vehicle into a car (net payload reduced to 965 kg). Under this agreement, the weight of all other optional accessories is disregarded. HMRC has also adopted this treatment.

http://www.hmrc.gov.uk/manuals/eimanual/eim23150.htm

Kombi’s have been a grey area, but not any more, following the case of Noel Payne v HMRC as reported by Croner Taxwise…

Under ITEPA 2003 S.115, a van is a vehicle where its primary construction is for the conveyance of goods or burden.  Kombi vans and those similar have not previously been thought to fall into this category due to them being designed to carry both goods and people. Historically, HMRC has offered a concession from 2002/2003 onwards for vehicles of a very similar construction, double cab pickups (including both uncovered and covered models), if the payload capacity of the pickup exceeds a metric tonne. HMRC accepts that these vehicles can be treated as a van for benefit in kind purposes.

With such similarities in the construction of the Kombi van, this has led to this concession being applied to the Kombi vans as well. However, in Noel Payne vs HMRC, a judgment was reached that the primary construction of the kombi van was not for the conveyance of goods alone but rather that its purpose was for the conveyance of both goods and people equally. This means that the Kombi did not meet the requirement to be considered to be a van and therefore for benefit in kind purposes it is a car.

The advice from Croner is that from now on Kombi’s and any van built to carry passengers should now be treated as a car for benefit in kind purposes, the case did involve a Vivaro as well but that was manufactured as a Van and later converted so that was allowed to be treated as a Van.

This also has implications for VAT and Capital Allowances.

steve@bicknells.net

What do you do in your garage? Reply

Most small businesses and employees do something in their garage.

The top choices being

Storage

In order to claim a tax deduction for using your garage for storage as part of your business or as an employee you will need to charge rent. If you don’t you will be taxed on it as PAYE.

To do this you will need a licence agreement between you and your company, the agreement might need to have some special rules in it depending on what is being stored including fire prevention and health and safety.

The rent then needs to be declared in the UK Property pages of your self assessment return.

You will be able to offset relevant costs.

 

Cars

Obviously garages are designed for cars and that’s often what they are used for.

Your company may require you to hire a garage to protect your company car and provided this is an employment condition the cost of hiring the the garage should be tax free, even if the employee pays and is reimbursed.

The employer should give the employee a letter insisting that for security reasons the car must be kept overnight in a garage.

So what are you doing in your garage?

steve@bicknells.net

 

Are you going to buy a car before April to avoid the Road Tax Increases? Reply

The rates explained

Vehicle tax for the first year is based on CO2 emissions.

After the first year, the amount of tax that needs to be paid depends on the type of vehicle. The rates are:

  • £140 a year for petrol or diesel vehicles
  • £130 a year for alternative fuel vehicles (hybrids, bioethanol and LPG)
  • £0 a year for vehicles with zero CO2 emissions

Auto Express have made some useful comparisons

You can read their full article by clicking here http://www.autoexpress.co.uk/car-news/consumer-news/88361/tax-disc-changes-everything-you-need-to-know-about-uk-road-tax

Highest proportionate increase CO2 emissions Current First Year Rate New First Year Rate Three years’ tax current rate Three years’ tax new rates % change three year ownership
Peugeot 208 1.2 PureTech (82) Allure 104g/km £0 £140  £40 £420 950%
Ford C-Max 1.5TDCi (120) Zetec 105g/km £0 £140 £40 £420 950%
VW Passat 1.6 TDI S 105g/km £0 £140 £40 £420 950%
Nissan Qashqai 1.6 dCi  (130) N-Connecta  115g/km £0 £160  £60 £440 633.3%
Lowest proportionate increase
SEAT Alhambra 1.4 TSI (150) 150g/km £145 £200 £435 £480 10.3%
Ford Mondeo 1.5 EcoBoost Titanium  

134g/km

 

£130

 

£200

 

£390

 

£480

 

23.1%

Jaguar XE 2.0i R-Sport (auto)  

179g/km

 

£355

 

£800

 

£815

 

£1,080

 

35.8%

Toyota Verso 1.6 V-Matic Icon 154g/km £185 £500 £555 £780 40.5%
Honda CR-V 2.0 i-VTEC SE 4WD 173g/km £300 £800 £720 £1,080 50%

Why has government changed the rates?

Basically too many cars are now low in CO2 that not enough tax is being collected!

New VED system – for cars registered from April 2017
Emissions (g/CO2/km) First year rate Standard rate*
0 £0 £0
1-50 £10 £140
51-75 £25 £140
76-90 £100 £140
91-100 £120 £140
101-110 £140 £140
111-130 £160 £140
131-150 £200 £140
151-170 £500 £140
171-190 £800 £140
191-225 £1200 £140
226-255 £1700 £140
over 255 £2000 £140
*cars over £40,000 pay £310 supplement for 5 years

steve@bicknells.net

 

How you can update HMRC on your company car details Reply

mann im auto

Based on HMRC Statistics approximately 1 million employees have a company car, its the 2nd most popular benefit in kind. The most popular benefit in kind is Private Medical Insurance (2.2m employees).

Often employees will change cars or start/stop having fuel for cars during a tax year and the tax on company cars can be significant, you can use this HMRC calculator to assess the the tax.

http://cccfcalculator.hmrc.gov.uk/CCF0.aspx

HMRC have just introduced a new Check and Update Service for Employees so that you can make sure HMRC have the correct information

https://www.gov.uk/update-company-car-details

You may find that it would be better for your employer to give you a loan, beneficial loans up to £10,000 aren’t a taxable benefit.

https://www.gov.uk/expenses-and-benefits-loans-provided-to-employees/whats-exempt

There companies like Maxxia that promote salary sacrifice schemes for cars

http://maxxia.co.uk/asset-finance/car-salary-sacrifice/

steve@bicknells.net

Is it a Van or a Car? Reply

black large pickup

It makes a big difference whether a double cab pick up is treated as Car or a Van for tax purposes, in summary:

  1. Benefit in Kind on Cars is linked to CO2 where as on a Van its Flat Rate (and could be zero if your private use is insignificant)
  2. Vans qualify for the Annual Investment Allowance, Cars have restricted Capital Allowances
  3. You can reclaim VAT on Vans but its much harder to reclaim VAT on cars

HMRC have some guidance in EIM23150….

Under this measure, a double cab pick-up that has a payload of 1 tonne (1,000kg) or more is accepted as a van for benefits purposes. Payload means gross vehicle weight (or design weight) less unoccupied kerb weight (care is needed when looking at manufacturers’ brochures as they sometimes define payload differently).

Under a separate agreement between Customs and the Society of Motor Manufacturers and Traders (SMMT), a hard top consisting of metal, fibre glass or similar material, with or without windows, is accorded a generic weight of 45kg. Therefore the addition of a hard top to a double cab pick-up with an ex-works payload of 1,010 kg will convert the vehicle into a car (net payload reduced to 965 kg). Under this agreement, the weight of all other optional accessories is disregarded. HMRC has also adopted this treatment.

http://www.hmrc.gov.uk/manuals/eimanual/eim23150.htm

A double cab with a payload in excess of 1000kg can still be classified as a car if the taxman dealing with the case decides it is a car. You may have to justify a genuine business need for the vehicle.

steve@bicknells.net