The First-tier Tribunal (Tax Chamber) has recently ruled that a car leased in the name of a company but for which all lease payments, maintenance and insurance were borne by the director who used it was a benefit provided by reason of employment.

This decision may have an impact on any business that leases cars through a company, as the advantage of a lower lease premium may be outweighed by the tax and NICs liabilities that result. Businesses should also remember that, from 6 April 2014, qualifying payments for private use of cars must be made within the tax year in which the car is made available.

Fortunately for the taxpayer in this case, the tribunal did not consider that he had acted carelessly or negligently by omitting the car benefit from his tax return as he, and his advisers, honestly believed that there was no benefit.


A car that is “made available” to an employee by an employer and that is available for private use (without ownership of the car being transferred to the employee) produces a taxable employment benefit (car benefit). It does not matter that, in fact, the car is not (or is only occasionally) used privately.

The car benefit is calculated by multiplying the manufacturer’s list price of the car when new by an appropriate percentage, which depends on the carbon dioxide emissions of the car. If the employee is required to make (and actually makes) a payment for the private use of the car, that amount is deductible when calculating the car benefit. That deduction may reduce the car benefit to nil.

We hope that you found this newsletter useful; please note it covers the basics, but does not constitute formal legal advice. If you would like to discuss your individual case in more detail, please contact Irina Bernstein on 0207 843 1820 or send your email to

Please note that the above does not constitute legal advice.