Company Car For The ‘Self Employed’

[RobinW]

Hi,

I’m seeking some advice on a situation. I am classed as self employed, working for a manufacturer selling their product. I am paid on a daily rate and includes being able to charge for bank holidays and 20 days holiday. I am required to use my car and was told that I would get a car or van after working there for 3 months, however we are 6 months down the line and I am still using my car using a mileage allowance that does not cover the depreciation of the said car. They would ideally like to buy a car and for me to use it, but am I not right in thinking that this would effectively be a benefit in kind and rather dodgy because I am not a proper employee? It does look like the usual avoidance of paying employers NI contributions and pensions, but surely having a car bought or leased for me would be a bit suspect from our friends at HMRC.

Any help would be appreciated so I can clarify my thinking.

 

[WaveJumper]

Personally I think I would be more worried about sorting out in my own mind "if I am truly self-employed" or an "employee of this company" as you have alluded to it sounds like a classic case of avoidance to me.

Are you free to actually be working on something else during the week. I would also think they maybe possibly having issues regards insurance on a van/car if your not actually an employee of said company

 

[Mark T Jones]

Your conditions of work look very much like employment rather than self employment to me.

It's bit a decision that you or your 'employer ' are free to make - there is a set of test rules that you can find on line.

 

[RobinW]

Personally I think I would be more worried about sorting out in my own mind "if I am truly self-employed" or an "employee of this company" as you have alluded to it sounds like a classic case of avoidance to me.

Are you free to actually be working on something else during the week. I would also think they maybe possibly having issues regards insurance on a van/car if your not actually an employee of said company

When I joined, there was no official contract, just a short set of terms to agree the way I was paid. I found it interesting that there were no clauses set down about competitors or conflict of interest, so in some way I am free to choose, however, I am expected to sign in and out of their kiosk system. In some way being a self employed person gives me certain flexibility, but it is the car issue that concerns me. I’m trying to get a car allowance, but the company would rather buy and run the car so they get the tax breaks presumably. I’m just not sure that having a car would be breaking some law or setting me up for a big tax bill if I just accept their terms.

 

[Newchodge]

When I joined, there was no official contract, just a short set of terms to agree the way I was paid. I found it interesting that there were no clauses set down about competitors or conflict of interest, so in some way I am free to choose, however, I am expected to sign in and out of their kiosk system. In some way being a self employed person gives me certain flexibility, but it is the car issue that concerns me. I’m trying to get a car allowance, but the company would rather buy and run the car so they get the tax breaks presumably. I’m just not sure that having a car would be breaking some law or setting me up for a big tax bill if I just accept their terms.

Sounds like disguised employment to me, and not very well disguised either! There are already so many pointers to you being an employee that adding a company car won't make a lot of difference to that question.

 

[IanSuth]

If the company's car is given to you to use solely for work purposes and not for any personal that should mitigate tax implications to you as well I think but hopefully Cyndy or one of the accountants can give a better steer on that.

I agree though you look like a classic case of disguised employment - can you for instance nominate someone else of your choice to go to a customer sales meeting for you?

 

[fisicx]

I am required to use my car and was told that I would get a car or van after working there for 3 months, however we are 6 months down the line and I am still using my car using a mileage allowance that does not cover the depreciation of the said car.

Why aren't you pushing to get the company car your were promised.

And as other's have said, you are employed. If you were self employed you wouldn't be getting a mileage allowance.

 

[Chris Ashdown]

You could invoice the company for the maximum car allowance the HMC allows. think its

From tax year 2011 to 2012 onwards	First 10,000 business miles in the tax year	Each business mile over 10,000 in the tax year
Cars and vans	45p	25p

 

[Paul Kelly ICHYB]

As mentioned, your car maybe an issue to you, but your employment style should be more of one.

If they promised you a company car, they should give it to you, however, whichever way you get it or funding/support, you will probably have a tax implication. You should ask for an increase in pay to cover the cost of getting your own vehicle and still get them to cover the mileage.

 

[Kixoponev]

If they buy you a car, it could indeed be seen as a benefit in kind, which might get some attention from HMRC. Being self-employed means you should cover your own costs and not get perks like an employee.

It might be worth chatting with a tax advisor to get a clear picture and make sure you’re not getting into any hot water with HMRC. Good luck!

 

[numbersrule]

Hi RobinW

How many miles do you think you will be driving each year?

Assuming you are doing reasonably high mileage, I think your first best step is to ask the company you are working for, for their assessment of your Employment Status for Tax.

Please note I am not an Employment expert but even I can tell that your working arrangement sounds like a complete and utter muddle.

You should refer to the link below and undertake your own assessment of your Employment Status for Tax. That will enable you to start a conversation with the company you are working for.

Check employment status for tax

Use the Check Employment Status for Tax (CEST) tool to find out if you, or a worker on a specific engagement, should be classed as employed or self-employed for tax purposes.

www.gov.uk

Please note the above assessment is based on there being a 'Contract'. If you have accepted the simple terms and conditions you were provided with then there may be a 'Contract', depending on how it was all communicated.

When you have correctly confirmed your Employment Status I am sure your travel & vehicle ownership queries will simply and easily fall into place naturally.

Lastly, please note, if you are claiming 45p per mile that rate includes for depreciation.

 

[UK Contractor Accountant]

It's not the OP's decision to decide whether he is employed or self employed. It's the hiring company that's in the firing line with HMRC on an investigation.

 

[Newchodge]

Hi RobinW

How many miles do you think you will be driving each year?

Assuming you are doing reasonably high mileage, I think your first best step is to ask the company you are working for, for their assessment of your Employment Status for Tax.

Please note I am not an Employment expert but even I can tell that your working arrangement sounds like a complete and utter muddle.

You should refer to the link below and undertake your own assessment of your Employment Status for Tax. That will enable you to start a conversation with the company you are working for.

Check employment status for tax

Use the Check Employment Status for Tax (CEST) tool to find out if you, or a worker on a specific engagement, should be classed as employed or self-employed for tax purposes.

www.gov.uk

Please note the above assessment is based on there being a 'Contract'. If you have accepted the simple terms and conditions you were provided with then there may be a 'Contract', depending on how it was all communicated.

When you have correctly confirmed your Employment Status I am sure your travel & vehicle ownership queries will simply and easily fall into place naturally.

Lastly, please note, if you are claiming 45p per mile that rate includes for depreciation.

There is a contract. The terms may not be certain but there is, in law, a contract

 

[numbersrule]

It's not the OP's decision to decide whether he is employed or self employed. It's the hiring company that's in the firing line with HMRC on an investigation.

Yes, agreed. I was suggesting that RobinW request clarification from the company he is working for.
But that in the meantime he should do the assessment himself so that he is suitably prepared for the ensuing conversation.

 

[JEREMY HAWKE]

You cant be using the government milage payments as linked by @Chris Ashdown as this does cover for the depreciation on most "fleet type" cars

 

[eteb3]

Assuming you *are* self-employed, I'd be asking my accountant about moving to traditional accounting (assuming you're on cash basis currently), and using capital allowances to buy a car.