Are you considering purchasing a car through your company and also want to “do your bit” for the environment? If so you may not want to miss out on an attractive tax saving currently available!
The Government is committed to reduce carbon emissions and hence are very keen to promote the manufacture of green cars. For a car to qualify for 2 great tax incentives it needs to have CO2 emissions of less than 110g/km. The 2 incentives are:
- A 100% first year allowance on the cost of the vehicle. A company paying Corporation Tax at the Small Companies Rate of 21% would therefore make a tax saving of £2,100 on a car costing £10,000. (Compare this to a car with emissions of 160g/km upwards which now will only receive a 10% writing down allowance!).
- The employee driving the vehicle will be taxed on a benefit-in-kind of just 10% of the manufacturer’s list price. On the above example they would have a benefit-in-kind of £1,000 per year and even as a 40% higher rate tax payer would pay only tax of £400 per annum – that is just £33 per month to be provided with an expensed vehicle.
There is no doubt that these type of vehicles will not suit everyone, but do you have any employees (particularly those who do lots of business mileage) who would like to do a salary sacrifice in order to be provided with a green car? In that way you are receiving a good tax saving in your company, providing a nice benefit for your employee and doing your best to reduce your company’s carbon footprint.
Please talk to Ian Cooke (Ledbury) or Nikki Walding (Pershore) if you would like any further information on this topic.