Hi - a client of mine which is a limited company was due to insure the company van. At the same time the Directors insurance on his car (not a company car) was also due. His personal quote was for £475. The quote for the company vehicle was £600. The insurance company suggested to the Director that he put his car on the same policy as the company van as this would result in a reduced premium and assured the Director that this was common practice. As he predicted the premium was lower and came out at £975. Obviously insuring both separately would have resulted in a higher premium of £1075. My issue is that the split of the £975 was £525 for the Directors car and £450 for the company van. The Director was happy to pay it as was cheaper overall but is reluctant to reimburse the company £525 as this is more expensive than his original quote of £475. Has anyone come across a scenario like this before?
assuming that the car is not run through the company and we are talking reimbursement of 45p/25p for any mileage done in their own car then then insurance of the private car is nothing to do with the company and if the firector is unwilling to reimburse then this outflow must be taken to the DLA.
Why don't directors run these things by us before having bright money saving ideas that invariably cost them!
Lets not even get into mine that "heard down the pub" that one could put anything trough their company so long as they put a removable magnetic company ad on the side of it!!!
Well, at least mine spoke to me before enacting his big plans for a 4x4 and a small boat on his advertising budget.
on very quiet days, if you listen really hard you can probably hear on the wind my head beating repeatedly against my desk...
kind regards,
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Thanks for your reply. The director is willing to reimburse the company but only for the £475 he was originally quoted and not for the £525 that the insurance for his car has turned out to be on the joint cover. I can see that a saving of £100 was attractive so I can understand why he did it. He does get reimbursed as you say for his mileage at 45p/25p. I will just have to take his £475 and leave the remaining £50 as an additional cost of the company vehicles insurance I think.
On a different note, I really think that you should see a doctor about your need to bang your head repeatedly on your desk - thats just not right - I always believed that heads should be banged against walls.
Mmmm, I can see the arguement that the company was saved £150 on the van insurance at a cost of £50 which results in a personal gain.
Even though the net benefit to the company is £100 the director has still gained a benefit of £50 which needs to be declared on their P11D.
The tax liability on the gain is minimal but the fine for not declaring it could far outweigh any savings and to my mind is simply not worth the associated risk.
The best approach I feel would be to reimburse the £475 and put the £50 down as a benefit... Which does seem unfair for saving the business £100 but that does seem to be the best approach.
kind regards,
Shaun.
P.S. I reserve the walls for clients heads
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
