June 19 2013 Latest news:
Ed Foss, Senior writer
Wednesday, August 31, 2011
The increasingly complicated world of choosing your company car and the tax liability it leaves you with means that employees need to think long and hard about their decisions.
It’s not just about engine size, fuel type, exterior colour and interior finish.
A key part of the decision is the emissions which the car gives off — because that has a direct impact on how much it will cost you in the long run.
Company car drivers have been urged to check increased tax costs on carbon dioxide emissions when selecting their vehicles.
Accountancy firm PKF said the issue was particularly relevant now because many employees would be selecting new cars when the new registrations are introduced from September 1.
PKK has warned that selecting the wrong vehicle could cost an employee hundreds of pounds more a year in extra tax.
The ever-changing regulations concerning vehicle benefit-in-kind charges can mean a company car picked now could end up considerably more expensive by the time it is due to be renewed.
Patrick Harrison, a tax partner at PKF, said: “A current example would be a car ordered in 2007-08 with carbon dioxide emissions of 150g/km which will be taxed on 20pc of its value in the current tax year, yet was taxed only on 17pc when ordered.
“A car ordered in 2011-12 with carbon dioxide emissions of 119g/km will currently benefit from a 10pc tax charge but at the end of a three-year period it will be chargeable at 15pc tax.
“Employees are not taxed if they make use of electric cars under the current rule and petrol cars with emissions under 75g/km suffer only a 5pc charge.
“A car with a carbon dioxide emission level of under 100g/km remains tax-efficient for the employee.”