Honestly; I’ll completely understand if this query gets no replies and sinks silently to the bottom of the page; but it’s worth a shot, so here goes;

ive just been looking at my P11d for last year. My car is not a company car in that I do not need it for any aspect of my job, except commuting. Work provide it in exchange for a salary sacrifice. It works out a pretty economical not to mention minimal hassle way of having use of a new car. Anyway; I digress. Th P11d has a section called working sheet 2 which is where the BIK tax is calculated. Only thing is, there’s a little note at the top that says ‘Don’t use this form if the benefit is provided under an optional remuneration arrangement. Instead use working sheet 2b’ It strikes me that that is exactly what my situation is, yet the sheet 2 has been used.

The question that I’m hoping someone may have a clue about is; am I right that the wrong working sheet has been used, and if so, am I going to be liable for more, less or an indifferent amount of tax? HMRC scare me a little bit.

if you’ve managed to get to the end of this post, well done and thank you ☺️

Watching with interest as I’ve honestly no idea the HMRC were piss useless last year when I contacted them.

My car is not a company car in that I do not need it for any aspect of my job

Well, is it a company car, or not? If it is a company car and you pay something towards it is one tax implication.

If it is your car that work are paying for to diddle the taxman is another. (I’d be very surprised if it was)

Who’s name is on the V5? Is it lease, loan or Ling?

They’re not company cars and not a way to fiddle the tax man, it’s a company scheme for salary sacrifice for a car lease. Thought was pretty clear but hey ho.

What he said ⬆️😁

It is a lease car, sourced by and supplied by my employer and paid for by me via salary sacrifice. No tax men are intentionally being diddled, as a large amount of BIK tax is being paid, and it is the very definition of a benefit in kind. But I’m worried it’s not being accounted quite correctly, hence this thread…

Drac, I fear you may be watching for some time.

Yeah never found a clear answer yet, I may just stump up for an accountant.

My place offers this as well. To be honest I’ve never understood it and why anyone would choose it. How much do you save over a normal lease arranged on your own?

From what I can tell, as far as the taxman is concerned you receeve a company car and are taxed on that basis. Work reduces your annual salary by the amount it costs to lease the car.

Starting off you could have a salary of £26k and no company car BIK, afterwards as far as taxman concerned you will have salary of £22k plus a £4k BIK? Numbers not exact but you get my drift.

On that basis, I think the form used is correct. But still I don’t understand the attraction.

The BIK is generally significantly less than the PAYE / NI you would otherwise be paying.

If you’re in the market for a new / lease car anyway I can see it makes sense, otherwise I agree – even with the savings its not cheap.

How much do you save over a normal lease arranged on your own?

It’s not insignificant, plus this particular scheme is fully serviced, insurance, tyres, windscreen etc. Most personal leases don’t offer that.

That said, I’m actually coming away from the scheme because I’m concerned about the effect on my (career average) pension, combined with the fact that bangernomics is cheaper and more kinda, ‘me’.

My work has 2 schemes.

First is a company car scheme which is available or take cash payments monthly instead. I don’t have to use the car as a company car but it’s available to me and is classified as a company car. This has BIK egg. This is for management level staff.

The other is a colleague scheme available to all whereby colleagues can ‘lease’ a car via a salary sacrifice.

Both very similar but the second has no BIK implications you just pay the monthly payment.

So although you might not treat yours as a company car it’s still is likely classed as one.

The other is a colleague scheme available to all whereby colleagues can ‘lease’ a car via a salary sacrifice.

Both very similar but the second has no BIK implications you just pay the monthly payment.

Just like V8 and I do. See clear as mud.

So it’s not a company car.

So why are we being asked to pay BIK?

I’m an accountant, but it’s a while since I was doing company car and van tax, but here is how I see it.

You are basically paying the lease, but the company deducts it from your salary before tax.

The car isn’t a company car. So that section does not need completing.

BUT… and it’s a big but.

HMRC don’t approve salary sacrifice to lease a car. It’s OK on rail tickets, bikes and child care. Not on leasing cars.

The BIK is the saving on tax/NI you won’t be paying.

It put’s you in a bit of a weird position.  The car lease should be deducted after tax.

I’d have a word with payroll/HR first, but you’ll be liable for tax on the difference between the tax/NI saved – it’s still cheaper though. It’s just messy for you.  The BIK will be on that 30-odd percent or more of saved tax/NI, which is about a third of that saved.

So, you save £1000 year on the deduction, so it might cost you an extra £300-£400 in tax. So net saving is £600-£700.   It’s just messy filling in the returns – very messy – this is where you need advice, as I’ve never seen this.

PS the company should also be paying Employer’s NI on this too – which is where I think they might not be doing as it will be lost as a ‘company car’ alongside the ‘other’ company cars.(worked for a very large privately owned company -£200m before and this is a big risk of some of these hidden benefits – not to you, but the directors). I was warning them all the time.

HR and Payroll first. See what they say.

Cheers Fossy that seems a little clearer I know it has something to do emissions too which alters the percentage.

It’s messy but it is a bit of a perk.

See if your HR/Payroll deal with the return.  I did the P35 returns for our rather large construction company, and nobody used the vans privately at weekend…hmm – I did see people using them when I was at our caravan at weekends… but if they say no, it’s no.  Get’s harder with GPS and many had that..

Just make sure you know what your employer is saying – you are PAYE so I’d exclude anything about the car, but only declare anything that you earn outside of your employer.  Just double check, as they should be declaring the BIK you have in the ‘saving’.  It’s still cheaper than leasing yourself as there is a company discount.