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TAX TIP TUESDAY: Benefit in Kind Tax Changes for 18/19 Tax Year

Our 5-minute read – Tax Tips – for UK doctors and dentists will help you save tax, get organised with your tax affairs and make sure you meet important deadlines with ease.

This article does not constitute advice. Professional advice should be taken prior to acting on any part of it. The Financial Conduct Authority does not regulate tax advice. 

Benefit in kind tax changes

A benefit in kind (BiK) is a benefit that an employee receives from their employer that is not included in their normal wages.

For example, your company pays for fuel you have used personally, or permits private use of a company vehicle.

It is applicable for doctors and dentists that are directors’s (therefore employees) of their own limited companies.

BiK tax rates are increasing for company cars. The percentage will be based on the Vehicle Certification Agency’s CO2 emissions and calculated against the list price of the car.

CO2 Emission Range BiK percentage
0 – 50 13%
51 – 75 16%
76 – 95 19%

Benefit in kind taxes are also increasing for company vans and fuel benefit paid on cars and vans.

Van Benefits in kind are a fixed amount and they are increasing from £3,230 to £3,350, while the BiK on fuel for a van provided for personal use increases from £610 to £633.

The fuel benefit calculation for cars isn’t so straightforward. An employee that is provided with a company car and free fuel is taxed on a fixed cash equivalent of the benefit. This year the cash amount has increased from £22,600 to £23,400.

The benefit in kind charge is calculated by using the same percentage used for company car benefit, then multiplied by the fixed amount.

Could it be more tax efficient to claim business mileage?

Many doctors and dentists choose to claim business mileage as tax relief instead of running a car in their limited company.

It is useful to discuss this with an accountant who will be able to compare various methods for how you claim tax relief for use of a vehicle for work purposes. 

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