Company van use – the tax consequences

There are a number of tax consequences to be aware when employees are provided with company vans and fuel. A company van can be defined as a van made available to an employee by reason of their employment. There is usually nothing to report to HMRC if the van is used solely for business journeys, as a pool van or for vans provided as part of a salary sacrifice arrangement. If the van is not exempt then employers must report the cost on form P11D and pay Class 1A National Insurance on the value of the benefit.

Where the private use of a company van is ‘insignificant’, no tax is payable. The definition of insignificant is quite rigid and only applies where private use is exceptional, intermittent, irregular and lasts for short periods of time or happens on odd occasions throughout the year. Examples might include making a detour to drop children to school or using the company van occasionally to take rubbish to the tip.

Where a company van is used for private journeys there is a standard benefit charge for the private use of a company van of

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23
May

Give now pay later – what are the settlement rules?

The settlement rules are intended to prevent an individual from gaining a tax advantage by making arrangements that divert his or her income to another person who may be liable at a lower rate of tax or is not liable to Income Tax.

Where a settlor has retained an interest in a property in a settlement the income arising is treated as the settlor’s income for all tax purposes. A settlor can be said to have retained an interest if the property or income may be applied for the benefit of the settlor, a spouse or civil partner.

In general, the anti-avoidance settlements legislation can apply where an individual enters into an arrangement to divert income to someone else and in the process, tax is saved.

These arrangements must be:

  • bounteous, or
  • not commercial, or
  • not at arm’s length, or
  • in the case of a gift between spouses or civil partners, wholly or substantially a right to income.

Planning note

However, there are a number of everyday scenarios where the settlements legislation does not apply. In fact, after much case law in this area, HMRC has confirmed that if there is no ‘bounty’ or if the gift to a spouse or civil partner is an outright gift which is not wholly, or substantially, a right to income, then the legislation will not apply.

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