Article four, using a car or van for business.
Welcome to article 4 in our series of 6 articles in relation to the tax implications of using a vehicle for business purposes. Please see articles 1 – 3 here.
Yesterday we told you about Mr. Murphy and about how he could buy himself a luxury 5 seater SUV (Ssangyong Rexton W 5 seater business model) that costs €44k but that it would only end up costing him €18k. However, we also mentioned one caveat with this type of vehicle – if you are buying it through a Limited Company beware of BIK (see article 1 in this series)– although this vehicle is a commercial for VAT, VRT and Road Tax it is regarded as a passenger vehicle for BIK purposes and would be liable to 30% BIK. We also mentioned that you could avoid the charge to BIK if the vehicle qualifies as a ‘’pooled vehicle’’.
So, what is the criteria of a ‘’pooled vehicle’’?
1. the car is made available to, and is actually used by, more than one employee and is not ordinarily used by one employee to the exclusion of the others, and
2. any private use of the car by the employees is merely incidental to business use, and
3. it is not normally kept overnight at the home of any of the employees
Where all of the criteria above are met no taxable benefit arises. If any of the criteria are not satisfied, a taxable benefit will arise.
In tomorrow’s article we will look at the tax implications of the 2 most common methods used to finance the purchase of a commercial vehicle – Lease v’s Hire Purchase.