It is fair to assume that whichever way you finance a company car, the taxation involved is critical in making the right decision. We often have cars on special offer that have a very attractive contract hire rentals but consideration has to be given to the company car tax charges that come with it. We have listed below the current rate of charges that relate to company car tax, because you are receiving a company car as a benefit from your employer.
Company car taxation is tax which is payable because you are receiving the financial benefit of a vehicle from your employer. It is based on the C02 output and the P11d value of your car. The chart below indicates what percentage of the P11D price of the car you will pay in tax. People earning approximately £35,000 a year or less will have to pay 20% of this amount in tax, and people earning over £35000,00 pay 40%. If you earn over £150,000 each year you'll have to pay 50%. The tax is normally deducted each month from your salary. An example of this calculation is shown below.
This amount £5750.00 is now taxed at the current rate of your income tax to calculate the tax payable.
They produce less CO2, so the tax bill should be smaller. However they do carry 3% increase as they produce additional pollution compared to a petrol car. However, they are usually more expensive than an equivalent petrol version, you have to make sure the higher P11D price doesn't outweigh any advantage from a lower tax band. You also need to do your research on fuel costs, diesel costs more at the pumps than petrol and you need to meet the predicted fuel economy figures from the manufacturer to gain a real benefit.
If this is still confusing contact the account management team at Astute motoring and we can tailor a specific quotation for you.
Making sure the company is getting the most of the available tax allowances is somewhat easier. Both leasing and contract hire agreements for a vehicle below 160 GPKM CO2 output means that any rentals that are paid during the contract are 100% allowable against pre taxation profits. If the vehicle has a CO2 that exceeds 160GPKM you can only offset 85% of the rentals paid. These allowance rates are going to reduce in the future to match the commitment the UK has made to carbon reduction. Do not assume that getting the vehicle just under the 160 GPKM limit means you will be safe for the duration of the agreement.
However if you are considering alternative options to finance your car we strongly suggest that you contact the account management team as the recent changes in writing down allowances means that to claim to whole amount of tax allowances available may tax as much as 15 years.
Co2 management and taxation is the number one concern facing motorists today. Fortunately the manufacturers are making considerable inroads to the carbon emissions that their cars produce, and along with the recommendations and advice that Astute Motoring Limited can offer we are confident you will have the best package for the duration of the lease.
The Motor manufacturers are investing massive amounts of money in Co2 reduction and eventually the eradication of the Co2 that current motoring produces. This technology is not only expensive at the current time but in reality it is not a reliable and workable alternative to our petrol and diesel reliance. Electric seems to be the focus at the moment but at astute we are convinced that the solution lies with Hydrogen, however the global economies and power of the oil companies may mean that it will be a few generations until we see this technology available on a mass scale.
Petrol, diesel and taxation of the vehicles that use this fuel is here to stay, so we need to manage this better than we might do already. Astute motoring will help you see what is your main concern, company or personal taxation, fuel management or consumption or a full carbon output management. We look at how you use the vehicles, do you require driver awareness, journey planning, maintenance reviews and help you work to achieve your goals.
Despite everything we do there will always be an amount of Co2 that we cannot reduce. Astute motoring have a unique system that will allow you to be able to offset this Co2 through a number of approved carbon reduction program. We will invest in carbon reduction initiatives all around the world that will save the equivalent Co2 that you cannot stop producing through your motoring activities in the UK. This is not the answer to the problem but we feel it offers the best balance at the moment. We do not offer the Co2 offset if there has not been a consultation to reduce the Co2 produced in the first instance, this is not a simple compensation scheme, to give peace of mind.
Nothing more difficult than send an email or give us a call (01253 888 833)