This is a topic that will affect lots of people, I’d like to thank Nick Goddard from GBM Accounts for taking time out of his schedule to write this blog about how you can avoid a benefit in kind.
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As you may know, there are tax consequences of a business providing a car or van as a ‘perk’, or Benefit in Kind (BIK). In this blog, I am looking at vans.
We have many clients who provide vans to their employees and directors, mostly in relation to their job. If the van is being used for personal use, the BIK is £3,000. If fuel is provided for private use, as would probably also be the case, the BIK of this is £500. Therefore, by your employee using the van for private use, he will probably incur a BIK of £3,500; if he is a standard rate tax payer, the additional tax will be £700.
However, a BIK is avoided if it is only used for business, home to work travel and the occasional private use.
Where these requirements are met, we reinforce the company’s position by putting together an agreement to formalise the situation.
However, it must be stressed – the agreement must be adhered to.
Final note – the tax treatment for vans is a lot kinder than for company cars!
Further information can be obtained here.
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Thank you for the guest blog post Nick, hopefully people will now be better informed about how to avoid paying a benefit in kind and save themselves some tax.
