Benefit in Kind tax

[Whirlygig]

Firstly, there are two situations; one where a group of people set up a limited company purely for the purposes of running their own aircraft and the second where a company/business (say, a construction company) owns an aircraft as one of the directors holds a PPL.

In the first case where say, four chaps set up a limited company to buy and aircraft for £10,000; each stumping up £2,500. This will be the share capital of the company (unless they want them as loans but little odds). Each shareholder will pay for fuel and presumably pay an hourly amount into a maintenance reserve. In this scenario, each shareholder is paying what it costs (in effect) to fly the aircraft and so there is no benefit; what are they getting for “free”?

In the second case, the aircraft is financed completely from the profits of this fictitious construction company and the director uses the aircraft to fly himself around on holiday and maybe home. It is very little different to having a company car. This is tax allowable on the company but taxable on the employee as a benefit in kind and, quite frankly, deserves to be. However, should this PPL-holding director use the aircraft to fly customers around as a PR exercise (and, for argument’s sake can we’ll not get into the issue of whether his licence allows it), then that will be allowable on both the company and director as long as a legitimate business case can be demonstrated.

It sounds to me, in the example given, that someone is running an aircraft for hire but not contributing themselves to the running of it. Yup - tax him - he's getting something for nothing. We won't worry about his AOC!!

Cheers

Whirls