Benefit in Kind Tax; do I have to pay it on my plane or boat? Tax explained

What is the guidance for Benefit in Kind Tax (BIK) for planes and boats?

The short answer is yes, and since 6^th April 2017, the rules for Benefit in Kind Tax (BIK) on Asset made available to a director or employee (or their family or household) without transfer have been formalised under HMRC guidance EIM21873.

The basic rule for BIK on assets such as planes or boats that are made available for private use is to calculate 20% of the Market value of the asset and any additional running costs, take off business use and time when the asset is unavailable for use.

The interesting thing to think about where planes and boats are concerned is HMRC guidance EIM21888 – Asset made available without transfer to a director or employee: deductions for unavailability of the asset for private use.

https://www.gov.uk/government/publications/assets-made-available-without-transfer-of-ownership/assets-made-available-without-transfer

Specifically in the case of aircraft usage, we should consider the usual reasons for the assets being out of ‘Undergoing repair or maintenance’ which would include annual maintenance days for the aircraft and ‘Out of Hours servicing’, and most aircraft owners are familiar with this, but it is also worth considering the stipulation that you should not count days when the assets ‘cannot lawfully be used’.

In the UK, any pilot will tell you that there are certain days, especially in Winter, when the weather will effect the pilots ability to take the plane up, such as cross winds exceeding the planes limits, or adverse weather conditions closing the airfield in which it is kept. During the period when the BIK is being considered, it would be worth keeping a note of such days and recording any period of adverse weather of more than 12 hours, as unavailable for private use.

Also think about days when the aircraft (or any asset) has been hired out for use by another person for any reason, as being a period when it is unavailable for private use.

If you wish to discuss Benefit in Kind Tax (BIK) on aviation assets, please feel free to contact us.

Ella Doherty FCCA