Company cars and benefit in kind

My company car is due to be replaced early this year and I am keen to keep my taxable benefit as low as possible (as well, of course, as doing my bit for the environment). What are the current Benefit in Kind rates applicable?

1st May 2011

The taxable benefit in kind you are deemed to receive from the private use of a company vehicle is still based on the CO2 emissions and the list price. The benefit is calculated by reference to a table of percentages which are dependent on the vehicle’s CO2 emission and range from 15% to 35%. Petrol cars produce less toxic emissions than diesel and therefore, diesel cars have a 3% supplement (up to the maximum of 35%).

Vehicles with emissions under 115 g/km are known as Qualifying Low Emissions Cars (QUALECs), and a special rate applies to these of only 10%. Note however, the 3% supplement for diesel cars is still relevant and the normal rounding down rules do not apply (i.e. a vehicle with emissions of 116 g/km would not be a QUALEC). Please note, (under current plans), in order for your vehicle to qualify as a QUALEC in 2012/13, the emissions will need to be under 99 g/km and for 2013/14 under 94 g/km.

If you are really serious about getting a low emission vehicle, those with emissions under 75 g/km attract only a 5% benefit in kind. And if electric cars appeal to you, vehicles with zero emissions trigger no benefit in kind.

Please note, the reductions for vehicles powered by bi-fuels, road fuel gas and bioethanol were abolished from April 2011. The discount given for Euro IV standard diesel cars registered before 1 January 2006 was also abolished then.

There are lots of things to consider when buying a new vehicle such as the benefit in kind implications, available capital allowances, income tax upshots and the finance of the purchase, but your local TaxAssist Accountant can assist you with your decision.

By Jo Nockels

Disclaimer: The information provided is based on current guidance (at date of publication) from HMRC and may be subject to change. Any advice shared here is intended to inform rather than advise. Taxpayer's circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this information, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

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