Company car leasing arrangements

Key points

• Will a cash allowance and leasing allowance avoid a car or van benefit-in-kind charge?
• Personal contract purchase or hire arrangements are a popular way of acquiring a car.
• Approved mileage allowance payments will help pay purchase and running costs.
• The benefit-in-kind conditions in ITEPA 2003 s 114.
• Care must be taken with the ‘by reason of employment’ condition.
• The Court of Appeal’s decision in the Apollo Fuels case was negated by legislation.

Over the years some advisers have suggested arrangements to avoid employees being charged income tax and National Insurance contributions on the provision of a car by their employer. Various solutions have been reviewed by HMRC which is concerned to ensure there is no avoidance and this particular area is monitored closely by the department.

I have known advisers or vehicle leasing companies propose to employers that instead of being provided with a company car...