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02
Sep

Company Cars & Commercial Vehicles

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Running a company car scheme   

Once a decision has been made to run a company car rather than owning a vehicle personally, it is important that you plan accordingly. Important areas to think about include:

  • The type of car to be acquired and used?
  • How is it to be funded?
  • How many employees will use it?
  • What is the estimated annual mileage?

These are all things you must take into consideration before making a final decision. Our newsletter this month provides the essential information you need to know when planning a company car scheme and the effect it will have on your tax bill.

The decision on the car that is to be purchased should be based on the level of CO2 emissions. Generally speaking vehicles with higher CO2 emissions result in greater tax charges, whereas, vehicles with lower CO2 emissions can prove to be extremely tax efficient with large significant upfront tax savings along with low benefit in kind charges on the employee themselves.

New cars (this does not apply to second hand cars) that emit less than 75g/km of CO2 will attract 100% upfront tax relief in the year of purchase (when purchased outright or on Hire Purchase). This class of vehicle will also achieve minimal benefit in kind charges (see the table below – rates correct as at August 2016):

 

Model List price (£) CO2 Emissions G/Km 0-60 Secs Avg MPG BIK Value BR Tax due Class 1A NIC
Executive Cars              
JAGUAR XE 2.0d SE 163PS £29,775 99 7.9 75 19% £1,131 £781
TESLA Model S 60 kWh RWD Auto £53,835 0 5.5 123 7% £754 £520
PORSCHE Panamera 3.0 S E-Hybrid Tiptronic S 8 Speed £82,494 71 5.5 91 11% £1,815 £1,252
               
Family Estates              
AUDI A3 Sportback e-tron 1.4 TFSI e-tron 150PS S Tronic £33,190 37 7.6 176 7% £465 £321
VW Golf Estate 1.6 TDI BlueMotion 110PS £23,060 92 11 81 18% £830 £573
MERC C-Class Estate C 300 BlueTEC Hybrid Sport 7G-Tronic £38,635 99 6.7 74 16% £1,236 £853
               
Superminis              
RENAULT Clio 1.5 dCi Play 90 ECO £15,225 82 12 91 18% £548 £378
MINI Hatch 1.5 One D 3 door £15,215 89 11 83 18% £548 £378
               
Super Efficient              
RENAULT Zoe Electric Car Expression 65kW Auto £13,945 0 8.4 149 mile range 7% £195 £135
VW Up! Electric Car 60kW Auto £20,605 0 12.4 93 mile range 7% £288 £199
A company car to avoid?           ART due (45%) Class 1A NIC
ROLLS-ROYCE Phantom 6.75 V12 EWB Auto £304,315 349 5.8 19 37% £50,668 £15,538

 

VAT can be recovered on fuel used solely for the purposes of business. This also applies when fuel is paid for by an employee and claimed on expenses.

VAT on fuel bought by employers for private use can be recovered, but the VAT fuel scale charges must be applied when any such payments are made (these are based on CO2 emissions).

There are a number of other benefits that attract full tax relief in respect of company cars. These include; insurance costs, vehicle repairs, road tax and general maintenance costs.

Company car schemes are often seen as a complex aspect of tax planning. We can provide you and your company with the essential advice that we feel is important when influencing your final decision.

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