Company Cars for Couples

I have my own small company, via which I employ my wife to do some admin work. We have a company car which we share and both use for private purposes. I understand that a company car benefit kind in kind arises- but how do we allocate it between us?

4th July 2014

If your wife is on a low wage, HMRC are likely to challenge you allocating the benefit in kind her using two anti-avoidance rules:

Firstly, they will question whether it ‘normal’ to have a company car for her type of job.

And secondly, there are rules surrounded ‘excluded employment’ which can result in the other spouse carrying the burden of the benefit in kind instead (i.e. you). An employee is in excluded employment, if they earn less than £8,500 (including the value of the benefit) and they are not a director or material shareholder.

However, if her wages plus the benefit in kind takes her earnings to just over that £8,500 limit, the anti-avoidance rules above won’t apply. Class 1A National Insurance would arise for the company, but it may be significantly lower than if the benefit in kind was taxed on you.

Benefits in kind are complicated and can have a multitude of tax, National insurance and reporting requirements. If you would like advice on this, please contact us to be put in touch with your local TaxAssist Accountants office.

By Jo Nockels

Disclaimer: The information provided is based on current guidance (at date of publication) from HMRC and may be subject to change. Any advice shared here is intended to inform rather than advise. Taxpayer's circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this information, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

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