A brief Guide To Choosing A Company Car
This is a ” fast ” moving issue ( forgive the pun ) with rules and regulations changing frequently and manufacturers developing new technology at a similar if not quicker rate, it is therefore worth looking at some of the ways you can keep the tax charge down to a minimum.
Zero and low Emission Cars
The taxable benefit is calculated as a percentage of the list price of the car, on the day before it was first registered, plus certain accessories. This percentage depends upon the rate at which the car emits carbon dioxide (CO2), and the fuel type.
From April 2015, the five year exemption for zero carbon and the lower rate for ultra-low carbon emission cars will come to an end. Two new bands will be introduced for ultra-low emission vehicles (ULEVs). These will be set at 0-50 g/km and 51-75 g/km. The appropriate percentages for the remaining bands will increase by 2% for cars emitting more than 75 g/km, to a new maximum of 37%.
Qualifying Low Emission Cars
Known as QUALECs, for 2013-14 and 2014-15 these are cars with CO2 emissions between 1g/km and 75 g/km inclusive. For diesel cars, the benefit in kind percentage in these years is 8%. For all other types of car (including diesel hybrids) the percentage is 5%. Cars in this range include the Toyota Prius Plug-In Hybrid, the Chevrolet Volt and even the Porsche Panamera S E-Hybrid.
Manufacturers are continually improving emissions across the whole range including luxury and performance vehicles.
Double Cab Pick-Ups
Becoming more and more popular Double cab or “king cab” pick-up trucks can provide a tax efficient alternative to having the more main stream company car.
Many of the “new breed ” pick- ups are less agricultural than their predecessors and may provide a practical solution.
Provided they have a payload of 1,000kg or more, HMRC will usually accept these as being commercial vehicles rather than cars. So the benefit in kind charge is the flat rate van benefit figure of £3,000 per year, with an additional charge for private fuel of £564. For a higher rate taxpayer this would give a tax charge of £1,425 per year, less than £30 per week.
The benefit in kind and fuel benefit charges for company cars are calculated on the basis of the car’s list price when it was new. If you choose a car that was first registered more than 15 years ago, and its current market value is below £15,000 you can still use the list price to calculate your benefit in kind.
As vehicles of this age are unlikely to have CO2 emissions figures, the percentage of the list price used to work out the benefit is based on engine capacity. The maximum percentage is 35% . Private fuel is based on a fixed figure rather than list price, so you would need to pay for your own fuel to avoid excessive benefit in kind charges.
As you can see this is a slightly ” fluid ” issue and should you require further details or help and advice with your fleet arrangements from a taxation point of view please do not hesitate to contact the team.