# Any hidden taxes or charges for selling a company car to an employee?



## Moggy (7 Jun 2007)

Hi,

I am an IT contractor setup as a limited company. I am trying to decide whether to buy a company car or give myself an allowance.  BIK obviously is not a wise option.  A thought I did have was to buy a company car and sell it to my "employee" for a very nice price.  I know you're going to say its not possible...but I don't see why not?  Has the government covered this avenue with some ridiculous tax?  And if so can I instead sell it to a "stranger" who can then sell it to my "employee"?


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## Nige (7 Jun 2007)

A transfer between a company and its shareholder (though an intermediary or not) is treated as a dividend and subject to income tax at your marginal rate.


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## contemporary (7 Jun 2007)

charge the compnay civil service mileage rates instead


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## gonk (7 Jun 2007)

Depending on your needs, you could buy a small commercial vehicle instead. The BIK on these is much less than private cars. Road tax is also lower, and if it's diesel and you're VAT registered, you can recover the VAT on the fuel.


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## Moggy (8 Jun 2007)

Nige said:


> A transfer between a company and its shareholder (though an intermediary or not) is treated as a dividend and subject to income tax at your marginal rate.



OK thanks.  Would this also cover a member of my family who is not a shareholder?


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## capall (8 Jun 2007)

Yes,it does.
Companies where a small number of people or connected people control a company are classified in tax law as Close companies
There is a ton of anti avoidance legislation aimed at preventing directors extracting money from such companies other than at their marginal tax rates
As you can imagine transferring assets at undervalue is covered.

A company car is not the way to go unless you are doing the mileage that reduces the BIK


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