Need to provide own vehicle for new job
Discussion
I’m sorry if this is an often repeated question but I’ve done lots of searching and can’t really find anything exactly relevant
A relative has been offered a job which they’d love to take, but they’d need to provide their own vehicle - they currently get a work van
The new job is offering £10,000 more than their current salary to reflect this … however relative also has a pension which brings them into the 40% tax bracket, so the £10,000 pay rise only yields £6,000 - so £500 a month
The job is attractive and actually worth a small pay cut; but a new van PCP (would need to be new for the warranty) is about £500+VAT a month, fuel is about £400, and other stuff ~£200; so ~£1,200, sadly they can’t afford to be £700 a month worse off
We’d like to know if there’s a tax efficient way of doing this, i.e. paying for the van out of pre-tax earnings??
I’ve been reading about setting up as a sole trader, but not sure if a company can employ a sole trader to do it as their only job, I thought a sole trader was someone like a plumber that did lots of different jobs?
They wouldn’t need the van for personal use, which I believe makes it simpler for tax? Does VAT still need to be paid if it's not for personal use?
Relative said they could make do with an estate car, but from what I can see a car is treated harshly for tax and a van is actually more favourable??
Apologies for all the questions, but any guidance is appreciated. Basically we want to know if he could fund a vehicle and bring his overall earnings to within a few hundred quid a month of current, as he’d really like the new job
Before anyone suggests the obvious, we don't have time to contact an accountant because the employer wants a decision by the end of the week
Thanks for reading
A relative has been offered a job which they’d love to take, but they’d need to provide their own vehicle - they currently get a work van
The new job is offering £10,000 more than their current salary to reflect this … however relative also has a pension which brings them into the 40% tax bracket, so the £10,000 pay rise only yields £6,000 - so £500 a month
The job is attractive and actually worth a small pay cut; but a new van PCP (would need to be new for the warranty) is about £500+VAT a month, fuel is about £400, and other stuff ~£200; so ~£1,200, sadly they can’t afford to be £700 a month worse off
We’d like to know if there’s a tax efficient way of doing this, i.e. paying for the van out of pre-tax earnings??
I’ve been reading about setting up as a sole trader, but not sure if a company can employ a sole trader to do it as their only job, I thought a sole trader was someone like a plumber that did lots of different jobs?
They wouldn’t need the van for personal use, which I believe makes it simpler for tax? Does VAT still need to be paid if it's not for personal use?
Relative said they could make do with an estate car, but from what I can see a car is treated harshly for tax and a van is actually more favourable??
Apologies for all the questions, but any guidance is appreciated. Basically we want to know if he could fund a vehicle and bring his overall earnings to within a few hundred quid a month of current, as he’d really like the new job
Before anyone suggests the obvious, we don't have time to contact an accountant because the employer wants a decision by the end of the week
Thanks for reading
I can’t answer your questions with any authority or expertise, but take a look at things differently.
The job isn’t paying 10k a year more. It’s paying the same as the current position, but is asking you to source and run a vehicle for 10k on top, which isn’t realistic in your scenario. You can’t source, run and maintain a decent modern vehicle that’s up to the job for that money.
If you already owned a van (no purchase/HP costs) then 10k probably could cover it, without taking depreciation in to account.
I’ve had several jobs over the years that paid an all-inclusive car allowance like this. I never made a cent in additional earnings!
The job isn’t paying 10k a year more. It’s paying the same as the current position, but is asking you to source and run a vehicle for 10k on top, which isn’t realistic in your scenario. You can’t source, run and maintain a decent modern vehicle that’s up to the job for that money.
If you already owned a van (no purchase/HP costs) then 10k probably could cover it, without taking depreciation in to account.
I’ve had several jobs over the years that paid an all-inclusive car allowance like this. I never made a cent in additional earnings!
Doesn’t really sound like a very good deal.
NI will reduce your £500 take home also
Are they a particularly new company with restricted cash or very established and know how to get the “most” out of their staff?
If you’re going to be a paye employee of the company you can (just about) forget worrying about sole trader/vat/bik company car tax in the scenario you’ve described. You’ll be using your personal vehicle, car or van for work purposes.
If they give other staff vehicles I’d very much suggest trying to work something in which means they provide a vehicle - even if that means a reduction in headline salary.
NI will reduce your £500 take home also
Are they a particularly new company with restricted cash or very established and know how to get the “most” out of their staff?
If you’re going to be a paye employee of the company you can (just about) forget worrying about sole trader/vat/bik company car tax in the scenario you’ve described. You’ll be using your personal vehicle, car or van for work purposes.
If they give other staff vehicles I’d very much suggest trying to work something in which means they provide a vehicle - even if that means a reduction in headline salary.
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