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Q: The owner-manager of a close company makes a company car available for the private use of his wife, and she also has the unfettered use of a company fuel card which she uses at a local filling station. She does not work for the company and is not on its payroll. How should her car and car fuel benefits be handled for the purposes of forms P11D?

A: Benefit-in-kind charge typically arises when an asset is made available by a business for the private use of an employee or their family member by reason of their employment.

As the wife is not any employee the car and fuel card are clearly provided by virtue of the husband employment and should be reported on his form P11D.

The situation is less clear if the wife works for the business. In this scenario, HMRC will adopt a test of reasonableness. If it is reasonable to conclude that the vehicle is being provided to the wife by virtue of her employment, then the benefit should be reported on her form P11D. However, if HMRC conclude that the wife is being provided with the private use of the vehicle because of her husband's ownership of the business, then the benefit should be reported on the latter’s form P11D.

HMRC will reach a view based on the role, salary and responsibilities of the wife when compared with other employees of the business; or when compared with other employees of similar businesses in the locality. The test is whether the car would have been provided to any employee doing the same job or is the car provided to the employee as they are a family member.

Disclaimer

These publications from Markel Tax were correct at the time of going to press and should be considered as principles-based guidance only. To check current validity, call the Markel Tax helpline. ICAEW (as distributor) disclaims all liability for any errors or omissions.

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Markel Tax offers expert advice on UK tax and VAT via its helpline and provides monthly FAQs with questions and answers on common tax issues for businesses and practitioners.

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