Some employers find it more convenient to hire cards on a long term basis from a company which hires cars for use by the general public, and to give such a car to an employee for use as a “company car”, rather than buy a car. They then find it difficult to determine the “original cost” of the car to which they must apply the specified percentage to arrive at the month fringe benefit value, on which the employee must be taxed.
The Act now recognises this practice and provides that in such cases the value of the fringe benefit will be the hire charge paid by the employer to the hirer (Avis, Hertz, etc.).
Where the car is leased, no account may be taken of any payments by the employee for the licence, insurance or maintenance of the vehicle, as all such costs are borne by the lessor of the car.