Year end strategies Part 2: Is a company car the best option?
While company cars can be a useful tool for some businesses, it may come as a surprise to many to learn that they are not always the most tax efficient option.
The car benefit and car fuel benefit (where fuel for private use is provided with the car), on which you pay income tax up to 45%, is calculated at up to 37% of the list price (car) and the same percentage on a notional £22,600 (fuel) in 2017/18.
With the percentage (and therefore the taxable benefits on cars) increasing year on year, now may be the ideal time to carry out a complete review of your company car policy. It could prove more beneficial to pay employees for business mileage in their own vehicle at the statutory mileage rates, especially if their business mileage is high. In some cases, a company van might also be appropriate. The taxable benefit for the unrestricted use of company vans is £3,230 plus a further £610 of taxable benefit if fuel is provided by the employer for private travel.
Please note that changes to the rules on company cars are set to take effect from April 2018 onwards, with the appropriate percentages due to rise significantly.
We can help you to weigh up the pros and cons and decide on the most cost-effective way to organise your business motoring. Why not contact us to find out more?
This post is for guidance only, and professional advice should be taken before acting on any information contained herein. Neither the publishers nor the distributors can accept any responsibility for loss occasioned to any person as a result of action taken or refrained from in consequence of the contents of the publication.