company car bik question

cocochanel7

Hello

I have a query with how my employer is charging bik on my company car. I am on the road a lot so am doing a good bit of mileage, enough to be in the 12% band and very close to the 6%. However i pay 18% as do all the other employees as the company say they have an agreement going back 15 years with the revenue that everyone pays at 18%. This is obviously costing me money every month, and pretty much everyone else in the company bar one or two more office bases employees

I been onto revenue several times about it but can't seem to get anyone who knows anything about this agreement. The company say its above board and aren't willing to change it. I have never signed anything to agree to this, nor is there anything about it in my contract. Has anyone heard of schemes like this before?

Marcusm

cocochanel7 wrote: »

Hello

I have a query with how my employer is charging bik on my company car. I am on the road a lot so am doing a good bit of mileage, enough to be in the 12% band and very close to the 6%. However i pay 18% as do all the other employees as the company say they have an agreement going back 15 years with the revenue that everyone pays at 18%. This is obviously costing me money every month, and pretty much everyone else in the company bar one or two more office bases employees

I been onto revenue several times about it but can't seem to get anyone who knows anything about this agreement. The company say its above board and aren't willing to change it. I have never signed anything to agree to this, nor is there anything about it in my contract. Has anyone heard of schemes like this before?

It's been commonplace to have averaging arrangements for company fleets which mean that your business mileage is averaged across the fleet or specific functions. In reality, high business mileage is not a good basis for reducing BIK. I suspect you'll find something in your employment contract or handbook requiring you to accept it. 20 years ago, Revenue was threatening to abolish these admin agreements and 2 large companies I advised fought tooth and nail to keep them. In their cases, the unions couldn't countenance higher tax bills for urban reps as compared to country ones - they felt they all spent the same amount if time driving just in more traffic.

In reality, the personal benefit they're taxing is independent of the business mileage.

cocochanel7

Marcusm wrote: »

It's been commonplace to have averaging arrangements for company fleets which mean that your business mileage is averaged across the fleet or specific functions. In reality, high business mileage is not a good basis for reducing BIK. I suspect you'll find something in your employment contract or handbook requiring you to accept it. 20 years ago, Revenue was threatening to abolish these admin agreements and 2 large companies I advised fought tooth and nail to keep them. In their cases, the unions couldn't countenance higher tax bills for urban reps as compared to country ones - they felt they all spent the same amount if time driving just in more traffic.

In reality, the personal benefit they're taxing is independent of the business mileage.

Thanks for the reply. I have checked my contract and it definately says nothing about this arrangement. I can understand what you are saying but in our case their are also office based staff in the scheme as well. To them the car is more of a perk rather than a neccessity as they would have very low mileage. So we are subsidising them in effect, and they would be in much better paid positions by the way.
Surely BIK was structured the way it because the more business mileage you did the more you actually needed the car, whereas if you had very little mileage it was obviously a perk and so deserved to be taxed as such

namenotavailablE

Marcusm wrote: »

In reality, high business mileage is not a good basis for reducing BIK.

Could you explain why this is so MarcusM i.e. what alternative basis could be used to achieve a car BIK reduction?

Marcusm

The value to the employee of the PRIVATE use of a company car is not related to the BUSINESS mileage undertaken but rather to the value to the individual of the use of the car for private purposes. Permitting a reduction where significant business mileage was imported from the UK system (albeit modified to give a greater range of discounts). The UK changed the system in a "green" way so as not to encourage unnecessary business mileage - I know people who drove to meetings in Germany to achieve a reduction. It could be argued that by allowing a reduction for business mileage reflects an attempt to reflect the marginal cost of providing the car which would be lower where the car was a necessity rather than a complete benefit. (In the absence of a specific formula, this would be the method of determining the BIK amount.)

In the OP's case, the inclusion of HQ staff may act against his/her interests. I don't think the group schemes have ever been legislated for; in which case he/she could insist on being assessed by reference to their actual circumstances. I imagine it would be unpopular.

Tow

What's to stop the OP from (keeping a proper log book and) making their own tax return and claiming the lower rate?

cocochanel7

Tow wrote: »

What's to stop the OP from (keeping a proper log book and) making their own tax return and claiming the lower rate?

How would we go about this?