HB Accountants

March

Cheap Cars!

With the current focus on a greener environment you could feel self-righteous and at the same time save yourself some tax by changing to greener cars for yourself and, more importantly, for your family.

If your company buys (or leases) a car for you or a member of your family, and that car has CO2 emissions of 120 g/km or less, you will be taxed on a benefit in kind equal to 10% of the manufacturer’s list price of the car. If, for instance, the car cost £10,000 this would mean a personal tax charge of just £400 per annum if you are a 40% taxpayer. In return for that you (or a family member) will get the use of the car for free, although they will have to pay for fuel. The standing costs including insurance, repairs and servicing, road tax and AA/RAC subscription will be paid for by the company and should qualify for corporation tax relief.

With effect from 6 April 2012 the CO2 threshold is changing and the 10% rate will only apply if the CO2 rating is less than 100 g/kg. However, at 120 g/kg the charge will be at 15% which means the tax cost to you will increase to £600 per annum, which still seems like a good deal.

If the car is a new car (unused and not second hand), purchased before 1 April 2013 and with a CO2 rating of 110 g/km or less, you should be able to write off the full cost of the car for corporation tax purposes in the accounting year in which you buy it.

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