Company Cars For Spouse

System

Hi all - yes, it's this old chestnut of providing a spouse who is not a Director with a £1,000 salary and a company car with a combined total income (in this job only) of less than £8500 to avoid BIK.

I have found it difficult to get a clear answer from HMRC on this but what happens if the spouse actually has another job with a different employer on an income of say £20k.

Even though the salary and the car can be substantiated for business use I can't believe that some 'total income' isn't considered for calculation of NIC albeit not catered for on P9 - not sure about class 1a employers nic either ?

Thanks

System

Re:Company Cars For Spouse

Hmm..

Taking the easy points first, the other employment of £20k is irrelevant, provided the other employer is not linked to this employer in some way.

If there is no reportable benefit then there is no Class 1A NIC.

However..

I think it very unlikely that you are going to prove that:

i) the person receives the vehicle in their own right as an employee, and

ii) either it can be shown that equivalent vehicles are made available to employees in similar
employment with the same employer who are unrelated to directors or those earning £8,500
a year or more, or

iii) it can be shown that the provision of an equivalent vehicle is in accordance with the normal
commercial practice for a job of that kind.

It is highly likely that the vehicle is provided to a spouse by reason of the director's employment and it will therefore be assessed as a benefit of the director.

System

Re:Company Cars For Spouse

Many thanks Dean - that has put it nicely in context !

System

Re:Company Cars For Spouse

Sorry to drag this one up again. There is a legitimate need for a car as going everywhere in a van is neither economical or quite the impression that is desired !

I suppose another option would be a pool car which as far as I am aware will not attract BIK if it is left on site/no private mileage etc ?

System

Re:Company Cars For Spouse

The 'need' for a car is not really in point it is whether the car is made available to the employee for private use.

A genuine pool car would not confer a benefit on any employee providing all employees are excluded from using it privately and it is not used exclusively by any employees in particular over others.

Pool cars used exclusively by directors or their spouses would certainly raise eyebrows.

System

Re:Company Cars For Spouse

Thanks Dean for your help.

It is also comforting to know that somebodyelse is still working at half ten on a Friday night.