Do you use a company car for personal journeys? Due to the tax charges that will take effect over the next couple of years, it’s worth reviewing your current arrangements.
Tax will be charged for both the employer and the driver on all company cars from 6 April 2015, including electric cars which will be taxed at 5% of their list price. The taxable benefit for vehicles with low emissions (51-75g/kg) will leap up to 9% from the current 5%, and all other cars will increase by two percentage points. For cars with high emissions (over 210g/km), the taxable benefit will increase from 35% to 37% of the list price.
In 2016/17 the taxable benefit on all company cars will shoot up by another 2%, apart from those which are already taxed at the maximum charge of 37%. Then from 2017/18 the taxable benefit will increase again. Cars which are listed as ‘classic’ and having no CO2 emissions recorded will also be hit with higher charges.
So for example you were provided with a new Lexus NX 300 H Sport on 5 April 2014. The Lexus’ list price was £40,000, and its CO2 emissions rating is 121g/kg. If you keep the car for four years, you’ll have paid 86% of its original value in tax!
The most tax efficient alternative would be to use your own car and claim the mileage cost from the company. If you’d like some further advice and to discuss your options, just get in touch on 01782 279615.