US tax implications Benefit in Kind (Company Car)

Hi all,

My employer wants to offer me a company leased car with a fuel card.

Does this have some sort of crazy US tax implication that would make it a big no-no?

I know there are things to consider from the UK tax perspective, but I'm not too worried about that here, because people at work/HR can explain it to me.

Thanks, Max

You become subject to US tax on the annual lease value. It is still FEI...

You become subject to US tax on the annual lease value. It is still FEI...

Am I correct in thinking that because it's so heavily taxed in the UK that the OP is unlikely to owe US tax on it?

This isn't necessarily a straight forward situation.

Does the company lease the vehicle and then provide it free of charge to the employee along with a fuel card. For UK tax, it's a benefit in kind. For US tax, it's a taxable benefit.

Who pays the insurance? If the company, is it part of the benefit in kind (and the yearly statement for HMRC purposes reflects that - It's been awhile, is it a P40?). If the employee provides the insurance, then that portion surely isn't taxable by either the UK or US?

Some UK companies provide the vehicle, then lease the vehicle to the employee for a set rate, along with a fuel card, breakdown service, and insurance. The company, in this case, may have an agreement with HMRC that allows that no 'benefit in kind' will exist. These same companies may also provide a contract that specifies the employee, when retired, may still lease a vehicle provided by the company, along with breakdown service and insurance (no fuel card) which also is free from being a 'benefit in kind' for UK tax purposes. US tax? It's a simple lease agreement at a set price, does that make it non-US taxable? If it is at a favourable lease fee does that make a portion of it US taxable?

 

This isn't necessarily a straight forward situation.

Does the company lease the vehicle and then provide it free of charge to the employee along with a fuel card. For UK tax, it's a benefit in kind. For US tax, it's a taxable benefit.

Who pays the insurance? If the company, is it part of the benefit in kind (and the yearly statement for HMRC purposes reflects that - It's been awhile, is it a P40?). If the employee provides the insurance, then that portion surely isn't taxable by either the UK or US?

Some UK companies provide the vehicle, then lease the vehicle to the employee for a set rate, along with a fuel card, breakdown service, and insurance. The company, in this case, may have an agreement with HMRC that allows that no 'benefit in kind' will exist. These same companies may also provide a contract that specifies the employee, when retired, may still lease a vehicle provided by the company, along with breakdown service and insurance (no fuel card) which also is free from being a 'benefit in kind' for UK tax purposes. US tax? It's a simple lease agreement at a set price, does that make it non-US taxable? If it is at a favourable lease fee does that make a portion of it US taxable?

 

For me it's the former. The vehicle is definitely leased from a company by my employer and then given to me. It is taxed as a BIK in the UK.

Thanks for the responses!