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Company car leasing arrangements

26 January 2021 / Alastair Kendrick
Issue: 4777 / Categories: Comment & Analysis
37259
What goes around comes around

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 employees should be given a cash allowance. Then through an arrangement with a leasing company the employee is permitted to obtain a vehicle on either a personal contract purchase (PCP) or personal contract hire (PCH) arrangement. In the former there is an option to buy the vehicle at the end of the contract period but not in the latter. The employee uses a mixture of the cash allowance and approved...

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