How Vehicle Telematics Can Help With Benefit In Kind Taxes

Benefit in Kind can be a great way to reward employees and attract talent to your company while potentially saving on tax. Unfortunately, for many organisations the reality falls somewhere short of expectations. The threat of non-compliance with HMRC can cause stress for management, and sometimes it can even cost the company more money than had the benefits been paid in the form of a higher salary.

The complexities involved can set heads spinning and mistakes are easy to make. Here are a few of the key things to remember when it comes to Benefits in Kind. This is just intended to highlight some key points – we recommend taking professional advice from a tax expert of legal counsel to ensure you’re compliant with HMRC’s rules.

-Employees must pay tax on company cars the car is also used privately by the worker (including commuting to work). It then counts as part of their compensation package. The figure paid is calculated using a formula which takes into account the value of the vehicle, it’s CO2 emissions and the level of income tax paid by the employee.

-The employer must pay National Insurance on the value of the Benefit in Kind.

-If the company vehicle is a van, commuting to work does not count as private use, but if it is used outside of work the employee must pay tax and the employer must pay NI.

-If fuel is given to employees for private use of their company vehicle, there is a fuel benefit tax charged, and employers must pay NI. The rate of tax is calculated differently for cars and vans.

In order to ensure you are paying the correct amount of tax and/or NI, it’s vital to have an accurate way to record business and private mileage. That’s where telematics can help – some systems can help employees with company cars track every journey and mark the miles as work-related or not with their smartphone.

It makes mileage reimbursement much more easy, and can give employers a little more piece of mind that they’re not going to get caught out at the end of the year on their Benefit in Kind taxes.

If you’d like to know more about how technology can help you manage the challenges facing you today, get in touch to find out about our range of state-of-the-art telematics products.

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