Company cars are a perk of the job. However the tax man wants his share of the benefit.
By picking your car carefully you can minimise the cost to yourself, your employer and the environment. Basically the more environmently friendly the car the better.
The two basic factors affecting the tax cost are the Co2 emissions and the list price of the car. For detailed guidance see http://www.hmrc.gov.uk/cars/rule-changes.htm. The rules are difficult to understand and the goalposts are always changing. A&C Chartered Accountants can help you decide which car to get if you want to minimise your tax and carbon footprint.
The argument for Hybrid cars is becoming compelling. The current players in the market are the Toyota Prius 1.8 VVT-i T3, the Lexus CT 200h SE-I and the Honda CR-Z coupe, to name a few, with BMW entering the market soon with a new 5 Series hydrid. These cars carry a low taxable benefit charge of 10% of the list price due to their low Co2 emmsions.(between 89 and 117 ).
This means that for a basic rate taxpayer the annual tax rate will be as low as 2% of the list price of the car. If you consider that the employer also normally pays for the financing of the car, the insurance, service and repairs, tyres and road tax and that these are considered to be included in the taxable benefit charge, then the perk is certainly there to be had.
A&C Chartered Accountants are happy to help with the above or any other tax matters.
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