There is a relatively little used benefit in kind which may be of use to directors and employees which can be used when assets are provided to them which are not covered by other benefit categories. One of the most common uses is for a providing a computer for use at home.
The benefit to employee is 20% of the cost of the asset (including VAT), and as it is a benefit the company will also be liable for Class 1a NIC on the value of the benefit (ie cost of asset X 20% X 13.8%) in July following the tax year. The company is able to claim capital allowances of 18%pa from 2012/13 so for a cash rich company where there are not additional financing costs this is an efficient way of providing a useful benefit to staff. It saves having to pay the employee a much larger gross salary in order to pay cash to the value of the asset.
As a personal asset this works well too as the costs of a capital investment of (say) £2k, account for a £400 benefit, so only cost a 40% taxpayer £160pa in cash terms.
While this is most commonly used for computers it also applies to motor bikes and other vehicles not classified as cars including three wheelers and trikes. For certain directors or employees this can be a most useful benefit, however running costs should be borne privately otherwise they will be subject to NIC.
These facts are based on a specific example and may not apply to your circumstances so please seek professional advice before taking any steps based on the information shown. If you would like advice in this or other areas feel free to call. Alastair Wood, AW Accounting, Gravesend – Accountants who “speak your language”