Company Car Tax
Q1: How is Company Car Tax Calculated?
Q2: What is company car tax?
Q3: Are there any dispensations for low-emissions cars that aren't 100% electric?
Q4: Is there a maximum price cap on the amount taxable on a company car?
Q5: Why are diesels so popular?
Q7: What about hybrid cars? Where do they come into it?
A: Hybrid cars generally have lower CO2 emmisions than Petrol of Diesel equivalent models, they are taxed on the same basis as all other cars.
Q8: If I buy or lease a used car can I reduce the company car tax I have to pay?
Q9: So how much should I expect to pay in company car tax?
Diesel engine cars have a 3% supplement added to the P11D banding until April 2021.
Q10: Company Car Tax bands change every year how can I avoid having a tax bill bigger than I expected.
Company car tax terminology
Additional rate - this is a tax rate for people earning over £150,000 each year, and is payable at 50%.
Basic rate - for 2016/2017 employees earning under £43,000 a year, a lower rate of tax is payable. With regards to company car tax, they are eligible for a 20% tax rate.
Benefit in kind (BIK) - this is any benefit which employees receive from employment but are not included in a salary. The obvious example in our case is company cars, which are taxed according to the income of the employee.
Emissions - the amount of gas the car emits from the exhaust. Measured in terms of CO2 for company car tax purposes.
g/km - the level of carbon dioxide emitted by a car is measure in grams per kilometre.
Higher rate - for 2016/2017 an employee earning between £43,001 and £150,000, a higher rate of tax is payable. With regards to company car tax, this means paying 40% tax.
P11d - this is the form that each employer must fill in annually and send to the tax office.
P11d value - this is the value of your car including RRP, VAT, delivery and any extras (such as metallic paint or satellite navigation). It does not include road tax or first registration fee..
Recommended retail price (RRP) - this is the amount the published price the car manufacturer car charges for the vehicle and optional extras. It's likely that some RRPs will be very different from the actual price the customer pays for the car thanks to heavy discounting, so be aware that you may end up paying far higher tax on your car than you thought.
Vehicle Excise Duty (VED) - this is payable on all cars and vans, and is based on the CO2 output of the car in question.
This information is correct as of the 2016 budget, however you should speak to your tax advisor for more detailed information.
If you would like to discuss your own circumstances further then please get in touch on 01825 720900 or firstname.lastname@example.org
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