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We Make Administrating Vehicle Benefit in Kind Simple

December 03, 2013 by Andrew Mead

As Mark Twain said “The only two certainties in life are death and taxes” and while we are all aware of the necessity to pay Income Tax, perks of the job, or non-cash payments in HMRC (Her Majesty’s Revenue and Customs) terms, are also taxable and known as “Benefit In Kind”.

Employees with company vehicles may be liable to pay tax on such ‘benefit,’ furthermore, if the company pays for the vehicle’s fuel, the amount of tax may be increased because the ‘benefit’ has increased. Moreover, the employer may have an extra duty to pay, which is encompassed within its National Insurance contribution. However, both employers and employees could avoid having to pay this extra tax if they are able to prove their vehicles are used exclusively for business, through the provision of accurate records. In addition, those who have to pay Benefit In Kind tax on the vehicle may also need to track who paid for the fuel.

An effective way of providing this evidence, that can also provide a vast number of additional business benefits, is to capture and report this information using a GPS fleet tracking system. At first glance this may seem like a case of ‘Using a sledgehammer to crack a walnut’ but the new generation of GPS fleet tracking (delivered as SAAS Software As A Service through a web browser) not only means that you might save money you would otherwise have to pay to HMRC but that you may also significantly improve your business efficiency in costly areas such as fuel use.

While the responsibility falls on the employee to demonstrate there has been no private use of a vehicle, there are clearly also good reasons for the employer to ensure this evidence is available. A GPS fleet tracking system may enable the employer to provide evidence to HMRC about the exact movements of a vehicle. A GPS fleet tracking system can generate reports which show the movements of a vehicle and where a vehicle was at precise dates and times, as well as a whole host of other information that may be used for business management purposes.

The general tax information contained in this article has been authenticated by Hillier Hopkins LLP. However taxpayers should obtain individual advice to ensure it applies in their own circumstances.

For more information on how Fleetmatics can be used to help your business, please visit: www.fleetmatics.co.uk


HMRC guidance on BIK concerning cars: http://www.hmrc.gov.uk/cars/index.htm

HMRC leaflet on Tax and NIC: http://www.hmrc.gov.uk/helpsheets/490.htm

The information provided in this advertisement is not intended to apply to any particular individual or situation. Results may vary, depending upon actual circumstances. The information contained herein is not to be construed as tax advice or applied to the reader’s unique tax circumstance or any business; rather, the information contained herein is intended to provide information and/or suggestions only. Fleetmatics and/or its affiliates shall not be responsible or liable with respect to any information provided herein or its use. You should consult with your tax representative for tax guidance applicable to your situation.