IS COMPANY CAR TAX DRIVING YOU CRAZY? (08/05/12)
Company cars remain a popular employee benefit. But with the March Budget signaling further increases in taxation, isn’t it about time you considered whether driving a company car is a perk – or a pain?
Tom Saltmer, senior accountant at Burgess Hodgson, reveals his top five tax saving ideas for company cars:
• Should you have a company car at all?
Owner managed businesses have the option of owning a car personally and charging the company for business miles – and in many cases this is the most tax efficient option.
• Look carefully at the model of car chosen
If you are going to have a company car, look carefully at the particular model of car. The Co2 emissions (and thus tax costs) of models of very similar vehicles can vary widely.
• Consider a van
Not always practical for some people but van benefits are substantially lower than car benefits. Depending on the use of the van there may actually be no tax charge at all.
• Consider paying the company for private fuel
To avoid the private fuel element of the car benefit discussed in the main article, consider reimbursing the private fuel used. In many cases this works out to be more tax efficient than paying the tax on the fuel benefit.
• Review old company cars
Remember that the company car tax is always based on the new value of the car – even if the vehicle is now several years old. In some cases the annual car benefit can exceed the value of the car. If this is the case consider removing the car from the company.
* if you have any questions about this story, or any other tax-related issues, please ring us on 01227 454627 or email firstname.lastname@example.org