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Administrating Vehicle Benefit in Kind

Vehicle Benefit in Kind (BiK)

If you use vehicles for your business and your employees ca utilise them for their own private use, including journeying to and from their place of work, then this will be considered a taxable benefit by the Inland Revenue.

Just how much tax will be due, depends on three main factors:

  • The value of each vehicle and first registration fee.
  • The vehicle's CO2 emissions.
  • What type of engine it has - petrol or diesel.
The tax due will then be assessed according to the income tax rate of the driver. If you are also providing free fuel for private use to your employee, this will be included as a taxable benefit and increase the amount to be paid.

Although using a company vehicle for private journeys may initially be thought of as a bonus, the impact on the employee's tax bill and the extra duty that HMRC will require from the employer needs to be given consideration.

How BiK Impacts Both Employers & Employees

BiK has a significant impact on both the employer and employee.

  • Employees are required to pay their marginal tax rate of 20% or 40% on the resulting BiK calculation.
  • Employers will have to pay extra dues incorporated in their current National Insurance contributions.
It is important to be aware that the total amount per annum for all the relevant drivers in your workforce could be a large company cost. What's more, miles clocked on company cars during private vehicle usage increases wear and tear on the vehicle. This may lead to added costs in repairs.

There are also other matters than can complicate BiK calculations.
For example:

  • Vehicle CO2 emissions are subject to change
  • The taxable benefits for company vans is unclear
  • Private usage may be restricted
  • What qualifies as 'private' usage is a grey area
These details may be off-putting to some but many employers still choose to offer Vehicle BiK. These employers will need to be able to track the whereabouts of their vehicles at any given time. They will also need to be able to track who paid for the fuel. This means accurate mileage and vehicle usage reports are essential.

The only sure way to achieve this is by using GPS Fleet Tracking. GPS fleet tracking uses Software as a Service (SaaS) to deliver information in real time through a web browser. Your business will know precisely where a vehicle has been, with dates and times.

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Do you already have a Vehicle Tracking System?

Keeping Vehicle BiK Simple with GPS Fleet Tracking

Nothing provides better proof of vehicle use and business mileage than GPS fleet tracking. The physical systems are tiny in size, and they do all the work for you. They can be used to show Inland Revenue exactly what tax does- or does not- apply to you and your employees.

You will also be able to take advantage of the other benefits of GPS fleet tracking systems.

A Valuable Business Tool

GPS fleet management can assist you with identifying and resolving numerous other issues, such as:

  • poor driving habits
  • excessive idling
  • inefficient routing and dispatching
  • unauthorised vehicle use and theft
  • poor vehicle maintenance

With the right information to work with, you can:

It's easy to see how a GPS Fleet Tracking system can be a valuable intelligence tool for your business- relating to BiK or not.

Next Steps

To get more information about administering vehicle BiK, see this documentation by fleet management supplier Fleetmatics.

To find out more about how GPS vehicle tracking tracking can impact your business, and get free quotes from top UK vehicle tracking suppliers, you can fill out this form.

We will match your requirements to the suppliers best suited to your business profile. Our team will make sure you get the best service and the best deal. Filling out the form only takes a few seconds, so you can start saving your company time and money today.