Greener company cars could be better for tax
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A common question both from owner managers asking about a
car for them and their employees – should the company purchase the
car or should the user purchase it personally and receive
additional salary to cover the running costs?
The answer is a complex one as it must incorporate all aspects
of car ownership including the running costs (depreciation,
finance, tax, repairs and fuel) and the tax implications (P11D
value, emissions, fuel benefit, VAT, Income tax and NIC and capital
allowances).
The total cost of running the car and settling relevant tax
liabilities can differ by several thousand pounds between personal
and business ownership depending on the car and split between
personal and business mileage.
General rules would be to go green – low emission cars have low
taxable benefits.
For most cases high performance, high price and high emission
vehicles should be owned personally as they can generate huge tax
charges, with a benefit based on 35% per annum of their list
price.
Remove the provision for private fuel in company cars as the tax
on the fuel benefit can often outweigh the costs if employees
reimburse the company for private fuel.
You can always use HMRC's online calculator to give an idea of
the best option, or speak to your tax adviser.
- Burgess Hodgson Chartered Accountants are based at Camburgh
House, 27 New Dover Road, Canterbury, CT1 3DN. Phone 01227
454627, email or
visit the website.
Wednesday, December 14 2011
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