BIK Tax Management
From April 2007, the Benefit in Kind tax charge for employees with private use of a company van rocketed from £500 to £3,000. It is essential to be fully aware of the new BIK legislation and comply with HMRC guidelines in order to avoid further financial costs to the business and its employees.
What the changes mean
For those businesses which do not keep adequate records of drivers’ private and business use of company vans, the cost implications of the BIK changes are clear;
Financial cost to the business: • At 12.8% NI contribution, a business would face a BIK van charge of £448 per driver, per annum.
Financial cost to the employee: • At 40% tax rate and with fuel provided, the employee would face a BIK tax bill of £1,400 per year. • At 22% tax rate and with fuel provided, the employee would face a BIK tax bill of £770 per year.
Previously drivers would have faced a BIK tax bill of £200 and £110 respectively.
What are your options
Even if you prohibit private use and require drivers to declare no significant use the onus remains on you to prove that this is in fact the case to HMRC. This requires an accurate usage log to be kept up to date for every vehicle. Manual systems are costly to enforce and prone to human error or abuse.
The Eagle-i Solution
Eagle-i’s robust BIK van taxation solution automatically records driver and vehicle mileage and produces periodical management reports in a format that is compliant with HMRC guidelines. Available online or by email, the reports supplied by the Eagle-i system identify the business or private status of any journey and offer senior management a viable option when constructing a fully compliant van usage policy.
Eagle-i’s simple, reliable and effective solution can also unlock hidden business potential and offer other telematics-enabled operational reports including timesheet validation, SLA compliance and speed and fuel management.
