It’s a Pool Car isn’t it? Reply

Black Elegant Vintage Car

Yet again, we have another case on Pool Cars which could have been prevented had the right procedures been put in place.

The Case was decided in May 2015 and involved Mark and Trudie Holmes and their company KMS Logistics (UK) Ltd. The company owned 7 prestige cars which were used assist in maintaining and attracting clients.

There was no prohibition (not even a verbal one) on the private use of the vehicles, mileage logs showed that the cars were mainly used by Mr & Mrs Holmes. Until 2003/4 they had been declared as a benefit in kind but then the stopped being declared! There even seemed to be confusion over who owned the cars.

So not surprising Mr & Mrs Holmes lost the case.

Read the full details by clicking here

So what should you do to prove there is no private use:

  1. Keep the car on the company’s business premises
  2. Keep the keys at the company’s business premises
  3. Prepare a Board Minute
  4. Make sure your contract of employment bans private use
  5. Keep a mileage log
  6. Insure the car principally for business use

HMRC have specific rules on keeping vehicles at home in EIM23465

Even if you do meet the 60% rule you still have to prove ‘no private use’

steve@bicknells.net

 

 

Salary Sacrifice could save 45.8% in Tax and NI – how does it work? 10

Most employees pay 20% tax, 12% Ees NI and their employer pays 13.8% NI, so thats a total tax of 45.8% on employment income.

 

There are a range of tax and NI free benefits, for example childcare vouchers, where £55 per week can be paid by the employer, so lets use that as an example, using the calculator

http://listentotaxman.com/index.php

An employee earning £30k a year gets

 Wage Summary  Yearly  Monthly  Week
Gross Pay £30,000.00 £2,500.00 £576.92
Tax free Allowances £7,475.00 £622.92 £143.75
Total taxable £22,525.00 £1,877.08 £433.17
xTax due £4,505.00 £375.42 £86.63
National Insurance £2,732.64 £227.72 £52.55
Total Deductions £7,237.64 £603.14 £139.19
Net Wage £22,762.36 £1,896.86 £437.74
Employers NI £3,164.06 £263.67 £60.85

 

 

 

 

 

 

 

Total Tax and NI = £10401.70

If they use Salary Sacrifice for £55 x52 = £2860, new salary would be £27140

 Wage Summary  Yearly  Monthly  Week
Gross Pay £27,140.00 £2,261.67 £521.92
Tax free Allowances £7,475.00 £622.92 £143.75
Total taxable £19,665.00 £1,638.75 £378.17
xTax due £3,933.00 £327.75 £75.63
National Insurance £2,389.44 £199.12 £45.95
Total Deductions £6,322.44 £526.87 £121.59
Net Wage £20,817.56 £1,734.80 £400.34
Employers NI £2,769.38 £230.78 £53.26

 

 

 

 

 

 

 

Total Tax and NI = £9091.82

A saving of £1309.98 (45.8% of £2860)

For saves on this scale should you be looking at Salary Sacrifice schemes for your employees,I have seen schemes where it can be applied to a wide variety of things from Pensions to Cars

steve@bicknells.net